An Established Business
A franchise offers the advantage of operating under the banner of an already established business. The ideas, the brand, the operating techniques and much more are already tried and tested and in place ready to be implemented again and again at a new location as each franchisee takes up the mantle.
A Known Brand
Operating under the banner of a franchise allows a franchisee to take advantage of the previously established brand of the business. This means there will (in theory) be far less work (and cost) involved in trying to establish and build on the brand of the business. It will already be known and trusted by the market and therefore should produced a steady stream of brand-loyal customers. Adopting a franchise means the advantage of the franchises trademark and the benefits of a registered trademark.
Simpler Business Financing
Yet another advantage of franchises is the fact that acquiring business finance is generally easier. Investors are far more willing to invest in a business with an established network, secure brand and effective support structure. In some instances, finance may be acquired from the franchisor, making life even simpler for the new business.
Business Relationships
The franchisee can also take advantage of the numerous business relationships already established by the franchisor. In all likelihood, relationships with suppliers (and perhaps distributors) will already be in place and easy to manage. The advantages of already established relationships with advertisers and marketing teams may also be of benefit to the new business start-up.
Support and Security
Franchises offer the advantage of a support and security system. Often franchisors will offer training schemes and support with things like the management of accounts, sales, advertising and more. These sorts of things may well be included in the price of the franchise fee.
Less Likely To Fail
The old myth is that 95% of businesses fail within the first 5 years – this (false) point is often championed by franchisors who are trying to encourage new people into their network. The security offered by the franchise can give the impression that the business will be less likely to fail.
You’ll Make More Money?
People often think that another advantage of starting a franchise is that they will make more money. With the backing of a big name and a big brand, they think they’ll get more customers and thus more profits. In truth, this isn’t always the case. The fees that a franchisee pays to the franchisor often means a big cut in profit and due to the limits imposed by the rules of the franchise it is often less easy to invest the profits in a tax-efficient way as you could by forming a new limited company. A franchisee might benefit from higher profits in the beginning, but in the long term, they will often find that starting their own business would have been more profitable.