How Franchising Works
If you are reading this then you are probably already considering running your own business. Now you have to make the choice. Do you start a business from scratch? Buy an existing business? Or should you invest in a franchise?
Franchising works, simply, by allowing you to buy the rights to a business. This right allows you not only the use of their business logo and other trademarked material but, more importantly, an operations Manual which explains how to run your business. Think of franchising as paying someone for their business plan, marketing policy, Operations Manual and the use of their trading name. That's what franchising is - you are establishing a connection with a successful business so you can use its systems and capitalise on its existing brand awareness in order to get a swifter return on your own investment. You are using its established system and name, and running it by their guidelines. If it works why change it?
One of the biggest benefits of franchising appears to be the reduction of risk you will be taking for your investment. This is because franchises typically get up and running a lot quicker, and are profitable much quicker. According to the British Franchise Association (bfa) 92 per cent of franchised businesses are at least ‘marginally profitable’.
Another factor is the instant recognition your will receive from customers. When starting a new business you have to find and source your customers and gain their trust. With a franchise, the customer already knows what they're getting or at least heard. They will know the quality of the product or service at one location and this will be comparable to that of another location.
The benefits of owning a franchise even go into the financing of your new business. Lenders are usually more comfortable funding the purchase of a franchise because they already have a proven track record. Bankers usually look at a successful franchise as having a lower risk of repayment and thus are much more likely to loan money. Some franchise systems even provide in-house financing options.
Franchising is all about being in business for yourself but not by yourself. There are hundreds of opportunities and sectors to choose from, you just have to start your search.