As a result of the recent pandemic, many people are choosing to go into business for themselves. They often decide to start a business, which can have mixed results. However, an attractive alternative is to open a franchise of an existing property. Let’s look at six benefits a franchise offers over a new business.
1- Name Recognition
Name recognition is a key part of elections, popularity contests, and even businesses. If someone is looking for a place to eat, they might see “Tim’s Restaurant” and not know what to expect. However, if they see “Dairy Queen” on the marquee, they know exactly what they’re getting.
2- Reach Profitability Faster
A regular small business generally takes two to three years before it becomes profitable. With a franchise, that time can be significantly shorter, as you’ll be representing a brand that has enjoyed years of television commercials and personal experiences enjoyed by your customers. It isn’t guaranteed, of course, but the corporate office will be able to tell you the average time it took for other franchises in similar locations to turn a profit.
3- Proven Business Model
A lot of small businesses try innovative business strategies that might not work out. However, a franchise will have a proven business model that has been used at hundreds of other locations around the country. This model can usually be changed slightly depending on the specific needs of your location but it will be based on a proven winner. Prices are also generally set within a range by corporate, allowing you to avoid the dilemma of choosing the perfect price point.
4- Product Familiarity
Small businesses, especially restaurants, face an uphill battle when starting as most customers are likely unfamiliar with your offerings and how they taste. They might be reluctant to try something new, especially if they have to pay $15 for something called “Maria’s Tasty Burger”. However, they’re probably familiar with the taste of a Whopper or a Big Mac and will happily buy one without a second thought.
5- Easier Financing
Obtaining financing a small business can sometimes be a difficult proposition, especially if your ideas are revolutionary as this can scare banks or lenders. However, a franchise of an existing property is generally considered a “safer” investment and is more likely to receive financing.
6- Better Purchasing Power
With a small business, you’ll have to obtain most of your supplies on the open market. You may get a good price on quality materials or you may have to settle for a cheaper alternative. As a franchise, you’ll have access to the prices negotiated by corporate, which are lower as the supplier can make up the difference in volume. The result is lower overhead and higher profits.
These are six of the many reasons to buy a franchise instead of starting a new business. You can achieve the dream of independence at a lower cost and have a higher chance of success. Take time to research which franchises are a match for what you are looking for so you will have the best chance at success.
