Franchises Offer Attractive Business Ownership Option

By: Jessica Miller - Staff Writer for RedHotFranchises.com

 

looking at franchise opportunities, an entrepreneur should first understand the definition of a franchise.

A franchise business model provides product, trade names, operating procedures and generally whatever is needed for a business to function. A franchise is modeled on other businesses that have proven themselves successful in other similar markets. Franchise ownership, compared to a traditional business startup, provides risk minimization.

Generally, franchises are attractive because they have a system in place. An entrepreneur can own a business that includes a proven brand name, experience, support, facility design, and operating procedures that are already successful. Basically, a franchisee is in business for himself but not by himself.

Examples of franchises include many fast-food and casual dining restaurants, dry cleaners, quick lubes, car washes, service-oriented businesses and even sports promotion companies. All include a proven system. The business owner knows what works and what doesn’t and does not have to “reinvent the wheel.”
 
Franchises are a good fit for many people considering business ownership, and they have been especially popular in recent years with corporate executives who have lost their jobs as a result of downsizing.

According to a Department of Commerce study, 94 percent of franchises are still in business at the end of two years, and 93 percent are still operating at the end of three years. Compare this to 43 percent of independent businesses surviving into their second year and only 33 percent still in operation at the end of three years.

Advantages of franchising include:

risk minimization, name recognition, training, support, cost savings on inventory, cooperative advertising and site selection assistance. The franchiser usually assists with obtaining financing and often provides it. Some see the cost of royalties and franchise fees as a disadvantage, but most successful franchisees simply see it as a cost of doing business and believe they receive more than their money’s worth.

Business ownership is attractive to many because it allows an individual to take control of his own destiny. A business owner can earn what he is worth – no glass ceilings. Business ownership also allows owners to build equity, to never get transferred or laid off, and to control their own futures. The right franchise provides a roadmap to those accomplishments. It reduces the learning curve by providing systems and support.

Rapid growth is another attraction of franchising. As a franchise system expands into dozens and eventually hundreds of units, positive things happen regarding name recognition. Larger numbers of units allow a franchiser to advertise more, which in turn increases sales for franchisees. The resulting synergy is good for both.

Choosing the right franchise is an important job and can be made easier by working with a franchise specialist who works with many different companies and has the time to get to know a potential buyer and recommend business models that fit the personality, lifestyle and desires of the franchise buyer. Recently, the Springfield market has welcomed Wine Styles, Instant Imprints, MAACO, Sports Clips, Nixa Leasing and GM Finance, among other franchises.

The success stories of Harlan Sanders with KFC and Ray Kroc with McDonald’s are legendary. While no business model is 100 percent safe, franchise opportunities provide an entrepreneur with a system that has been proven.