Franchising is a signed agreement where a business owner allows you to use their business trademark, brand name, and business module to share revenue and an agreed initial fee. The business owner, the franchisor, opens his business to potential investors without sharing shares of the company. As the franchisee, you are investing your money in an established business, thus avoiding the mistakes and challenges of start-up entrepreneurs.
If you are an investor not thrilled with the prospect of starting a business then franchising offers you a unique, low-risk investment opportunity.
Franchising offers endless benefits like:
Gain From the Economics of Scale
There is power in numbers. When you buy goods and services under a big brand name, you benefit from the economics of scale. You will be favored in negotiations and making purchases because you are under an established company’s umbrella. If you need to make a lease, the terms offered are usually favorable. Some suppliers will offer unfavorable rates or refuse to deal with you if you are a start-up entrepreneur. A franchise business saves you a lot of money in advertising. Advertising a new product as a competitor is more challenging and expensive. Customers can easily buy from a place they recognize. They are more likely to purchase new products from a familiar company.
Franchisor Also Provides You a Clear Picture
Lack of enough market research is a mistake common to beginner entrepreneurs. In a franchising business module, the franchisor does the market and competition analysis for you. The franchisor’s market research gives you the confidence to buy the outlet, as you know, your service or product is in demand.
Get a System of Operation and Training on How to Use It
There are many uncertainties in a start-up business, and most of the time, it takes long before you get a working business module and get profits. Investing in a franchise assures you of a proven system of operation. A franchisor will also train you on the business strategies to keep it afloat.
Financial Support From Your Franchisor
Being part of a brand name, you are likely to get financial aid from your franchisor once in a while. This is dependent on the franchisor and your agreement with them. Most franchisors choose to offer you financial support to keep you afloat in the business’s initial stages.
There are international laws that protect you from exploitation by the franchisor. These laws protect you from making hasty decisions when signing the contract. They generally demand full pre-contractual disclosure about the business by the franchisor to the franchisee.
The biggest advantage of franchising is the reduced risk of failure. Franchising is an excellent and low-risk business investment. You get a full business package with all the benefits of a big company. Growth for a franchise is instantaneous and occurs naturally. It is easier for you to open up other branches from that than when starting your own business. At Franchise Direct, you get a variety of franchising businesses you can invest in.