How to Buy a Franchise.
When considering becoming an entrepreneur, one of the opportunities that must be considered is that of buying a franchise as opposed to “going it alone”. A franchise model and concept has a great deal of value and innate potential, when a franchise buyer steps into a franchise, they should ultimately be provided with a business system that lends itself to a higher rate of success than what could be accomplished alone.
The reasons that you should consider whether to buy a franchise are the following:
1. Franchises provide training, structure and a proven business system. You should go in to a franchise expecting support and a training model that will get you up to speed quickly and shorten your learning curve for the business. People buy franchises because they want to know that if something unforeseen happens when they start their business that someone will be there for them to help them through the difficult situation.
2. The second reason you would buy a franchise is that franchises typically can provide more branding and marketing power. By combining the group of units and franchisees, each of the franchise buyers benefits from a bigger brand, bigger advertising and a name that people recognize. Franchising is a branding and marketing machine, this will be a significant benefit for a franchise buyer.
3. The third reason you would buy a franchise would be that franchises many times will deliver established buyer relationships. Because the franchisor should have already developed strategic relationships with vendors and negotiated discounts, the franchisee will be able to step into these economies of scale and save time and money by utilizing already established vendor relationships.
4. The fourth reason that someone decides to buy a franchise is that the franchisor will provide key business intelligence and guidance to them when managing critical elements of the business start up. Things like demographic research, location assistance, store build out, grand opening and others will be either handled by the franchisor or supported by the franchise system.
When considering how to buy a franchise, it is important to understand that franchise models come in all shapes, sizes and businesses. There is no one size fits all for franchise opportunities. Many franchise companies are new and have less than ten locations. These organizations should be able to prove to you through the Franchise Disclosure Document that they are willing to go above and beyond in supporting you and providing a valuable business relationship as a franchisee. Smaller franchise systems can sometimes be the better investment because they should be offering significant incentives to get the first franchisees on board. Things like larger territories, lower up front fees and better terms should be part of the deal. Larger franchise systems will have more brand equity, more units, better economies of scale and will ultimately be more recognizeable to your customer base.
In either case, it is recommended that you work with a franchise consultant to discuss the differences and specifics of any potential franchise transaction prior to buying a franchise.
For more information on how to buy a franchise, contact us: (800) 610-0292