For aspiring business owners who want to start their own businesses enterprise with a proven track record and security, often franchising is a far better option. A franchise is based on an already existing proven business model that, in most cases, has worked successfully for other business owners.
In most cases, buying a franchise means a lower overhead costs as compared to independent new start businesses. This is because as a franchisee, you are to take advantage of the company’s nationwide distribution or purchasing system, this presents itself as either the benefits of economies of scale when buying materials or national clients bases when making sales.
A franchisee benefits from the national name recognition the company provides which in many cases has taken large investment and time to create. Normally, it takes several years for a start-up business to build a brand in a highly competitive market and this can be a costly exercise with no guarantee that the consumers will ever recognise the brand as a product leader.
Franchisors on the other hand, can provide their franchisees with instant brand recognition. In addition, the franchisor usually works to provide franchisees with tried and tested professional marketing campaigns to ensure that the customers recognise and remember the brand.
Franchisors are also better placed to invest more money for market research, and the benefits of this expense cascade down to franchisees. Research also helps you effectively market to your target customers to capitalise on local trends.
Additionally, it is advantageous to own a franchise when seeking finance from banks. Franchises are seen as lower risk and have a far higher chance of survival based on survival statistics for new businesses. Bankers favor businesses with brand names and long track records of consistent cash flow rather than unproven business with no to little history.