Are you a motivated entrepreneur with dreams of being your own boss? Has the idea of building a business from the ground up become a barrier to your dream? Does the thought of purchasing someone else's business leave you less than excited? Then buying into a franchise may be the key to moving your dreams into reality. Frequently termed business in a box, the franchise is an option to become your own boss, where much of the groundwork has been completed for you and training and support is provided.
One of the top reasons entrepreneurs gravitate towards the franchise is to minimize their risk. The franchise business model is known for providing the franchisees a product, concept or service that has been proven, tested and validated within the industry and can succeed in multiple locations. In a study conducted by the U.S. Chamber of Commerce, the success rate of new independent businesses versus new franchise locations was studied over a 7 year period. ?At the end the results were clear, only 18% of the independent businesses were still in operation compared to a staggering 90% of the franchise businesses. A great example of a successful franchise model is McDonald's. They have stood the test of time and can boast success in almost every corner of the world. Of course, McDonald's is one of the top, most well-known franchises, but I?m willing to bet you can list several more within a matter of seconds. ?
McDonald's brings us to the next advantage of the franchise, brand recognition. Brand recognition is often a tool consumers utilize when searching for a specific type of business. Think of the mom driving at the head of a van full of children on a long road trip. She is in an unfamiliar place, sees a sign with the "golden arches" and knows she can count on McDonald's to feed her and her children a satisfying meal at an affordable rate. Why does she know this? Because everybody knows this and that is brand recognition. When consumers are looking for a particular business they frequently gravitate toward a well-known name in the industry, thus some of the success of a franchise business is built in.
The franchise model uses a successful business concept that individual entrepreneurs may purchase the rights to and set up and run a location of that business, which is then still part of a larger company. The franchising company (or the franchisor) signs a contractual agreement in conjunction with the individual entrepreneur (or the franchisee) explaining in detail the company?s regulations for the franchise operation. By law, franchise sellers must disclose certain information and details about their business to potential buyers. Typically in the United States, franchises are organized under state laws and the Federal Trade Commission requires that franchisors provide Full Disclosure Documents to future franchisees in advance of their purchase.
While under contract, the franchisor and the franchisee have an ongoing relationship. This includes the provision of services by the franchisor such as support for site selection, training, product supply, marketing plans and even assistance in obtaining financing. The services provided to the franchisees can be considered another great advantage to a franchise purchase.
The perceived disadvantages of the franchise purchase are few. For some, they may include the fees associated with owning a franchise business such as the initial franchise fee. This fee includes the rights to open a business location using the franchise model, logo, and design as well as the initial training. There is also a periodic royalty fee assessed to remain part of the franchise system, provide continued branding, advertising, and administrative support. While paying fees is no one's cup of tea, they pale in comparison to the ability to start a business on your own with a full network of support to set your venture up for success.
The franchise business world is an awe-inspiring aspect of our current economic landscape. There are more than 150 franchise categories and thousands of franchise brands to choose from, making it an option suited for almost anyone. The vast number of options may seem difficult to navigate, but here at Transworld we have a Franchise Consultant on staff, with years of insider knowledge to share with clients interested in buying a business in a box!
For more information on the services Transworld can offer in your quest to begin a business and to delve deeper into the world of the franchise please contact one of our brokers and schedule a consultation.
Anne Schuller is a Certified Franchise Consultant (and Business Intermediary) for Transworld specializing in franchise development and sales. After an 18-year career as a physician assistant, Anne combined her entrepreneurial passion with her altruistic nature and career experience by becoming a certified franchise consultant through Business Alliance Incorporated. Working with over 500 franchise companies nationwide, Anne seeks to pair qualified candidates with pre-established franchise systems, as well as establish new franchises for business owners looking to expand their companies.