Minimized Risk
During a 26-year study conducted by the United States Department of Commerce, less than 5% of franchised businesses were closed each year.
The U.S. Chamber of Commerce found that 86% of franchises opened within the last five years were still under the same ownership with 97% still in business.
Gained Experience
Purchasing a franchise offers buyers years of business experience. They benefit from someone else who has gone through the challenges of seeing what works and what doesn’t. Through the initial franchise fee they are investing in the insight and knowledge to springboard into successful entrepreneurship.
Training and Support
Have a question about the best type of advertising? The franchisor has the answer. Need to know how many employees to staff during busy hours? How about slow times? The franchisor has the answer. Never purchased commercial equipment before? Don’t worry; the franchisor will guide you in the right direction. Basically, any question or concern can be answered by the franchisor.
Purchasing Power
Let’s assume just for a second that you are in contact with a supplier for your independent start-up business. You have just received a price quote for supplies for one location. Now, think about what would happen to that price if you had two locations – it would decrease. 75 or 100+ locations? That’s a level of purchasing power, acquired through franchising, that an independent business will never achieve.
Brand Recognition
Let’s assume just for a second that you are in contact with a supplier for your independent start-up business. You have just received a price quote for supplies for one location. Now, think about what would happen to that price if you had two locations – it would decrease. 75 or 100+ locations? That’s a level of purchasing power, acquired through franchising, that an independent business will never achieve.
Purchasing a franchise just makes sense
And here’s why …
Consumers most often prefer purchasing goods and services from recognizable names. They know that certain standards of quality and service are maintained by brands they know.
Franchises offer self reliant people the opportunity to complete in business without having to “re-invent the wheel,” as some might say.
Choosing one depends on the individual’s experience, interest, and abilities, but management capabilities are at the top of the requirement list for any aspiring franchisee.
Are franchises more successful than independent business?
We hear a lot of questions on this topic. Is there an accurate answer?
According to the International Franchise Association, franchise companies have a revenue advantage over independents. Oftentimes a very large advantage.
The franchise fees required to open a franchise can be significant, but they provide benefits. What kind of benefits, see below:
Franchises provide a proven system.
These systems prove works and what doesn’t. They account for market demographics, staffing levels, where to spend advertising dollars, and so much more.
The franchise company learned their lessons
by trial and error – by making expensive mistakes. They already tried advertising that doesn’t work. When you become a franchisee this information is shared with you. In a snap, you have access to all of that learned experience.
Franchises provide support and training.
Remember, the franchise companies make more money when the franchisees make more money. They have every incentive to help the individual franchisee succeed. Good franchise companies understand this.
Because of this, most franchise companies have employees with the sole task of supporting the franchisees. Typical areas might be IT support, Sales Training, Advertising, Accounting and Human Resources. Imagine the cost of an independent business trying to hire experts to give advice in all of these areas!
Before investing a single dollar into a franchise, you can find out all about it.
This gets people’s attention. With an independent business you have to make a lot of assumptions as you do your business plan.
With a franchise, existing franchisees are a resource to you. As part of your research you have the ability to call as many franchisees as you’d like and find out what their experiences have been.
According to a study by the accounting firm Arthur Anderson, 96.9% of franchise units were still successfully in business five years after opening.
The U.S. Small Business Administration found the average franchise had five times the first year revenue of the average independent business.
We would all expect a business with more support, more training, and a proven way of doing business to have the best chance of success.
It turns out the numbers back this up: Franchises are more successful than independents.