Franchising

People often ask me, "Why should I buy a franchise?" and I'm often too quick to respond, "You probably shouldn't." They think my response is sarcastic or rude, when in fact it's just honest. Even though franchising is the safest way for people to start their own business-it's successful, it's exciting and it has led tens of thousands of people to the American Dream--most people should not buy a franchise. Franchising is not for everyone. It's definitely not for most people. That said, I think there are many good reasons why people should buy a franchise, especially now. Building a business is difficult in the best of times. In a recession, you'll likely need the expertise of people who have succeeded before you. Therefore, you can rely on a successful franchisor to help you build a thriving business. However, only you can decide if it makes sense for you to buy a franchise. Here are 9 good reasons that may help you decide:

9 Reasons For Buying A Franchise

1. A recognized name and logo. In a recession, it helps if your prospective customers already know who you are and what you sell! That's not always the case, of course. It's one thing to buy a McDonald's or Midas franchise - highly recognized name brands and logos. It's quite another thing to buy a new franchise that has only a few outlets. That's not to say that there's anything wrong with buying into a new franchise. Even McDonald's and Midas started with one franchise!
2. A proven operating system. Someone has figured out how to run the business successfully, that is, profitably and in a fashion that the owner/operator finds satisfying. There's tremendous value in not having to re-invent the wheel, especially when you don't have extra capital to spend. The lack of a system, in fact, is the major reason new businesses fail. What you're really buying with a franchise is a proven system. You just need to be sure that it's in fact proven!
3. Marketing and sales systems. Every business sells something, whether it's a product or service. Often times, people are good at making the product or delivering the service, but they're not good at marketing and sales. Good franchises solve that problem for the franchisees. Once again, you just need to be sure the systems have been tested and are proven to work successfully.
4. Capital investment that may be less than starting a similar business independently. By the time you come up with an idea, test it, develop operating-marketing-sales systems, hire people, find a location, source equipment, etc. you can save yourself a lot of time and trouble by investing in a franchise. It's not always true. Sometimes you can start the business independently for less money, but what do you have? The brand you didn't buy is now your competition. How well can you compete?
5. Financial assistance. Again, this isn't always true. And with today's credit crunch, it may be less of a factor. However, some franchisors do loan money to franchisees. Plus, lending and leasing institutions are often more inclined to loan money to a franchisee than to someone who's starting a similar business independently. Why? Because franchising has proven to be a safer way to start a business. Lenders like proven concepts!
6. Training and Support. The franchise fee that you pay enables the franchisor to provide initial training and some initial support. Ask yourself this question: "How valuable is it to have someone teach me how to operate this business successfully? And to have them hold my hand, answer my questions, and guide me through the start up?" If the franchisor's training is effective, it alone is probably worth far more than the franchise fee.
7. Ongoing Training and Support. The franchisor will continue to provide training and support to you for as long as you are a franchisee. As a business grows there are often new challenges that arise. The franchisor's training and support saves you, as a franchisee, from having to go out and learn how to respond successfully to those challenges.
8. Research & Development. You don't have to be as concerned about the development of new products and services as does an independent business owner. Part of your franchisor's responsibility is to look down the road to the future development of the business and to create or acquire appropriate new products and services, and teach the franchisees how to market and sell those new products and services. There's tremendous value in this advantage alone.
9. You are one of many. There are benefits to belonging to a network of like-minded individuals and business owners. In general, people like to belong. There's comfort in knowing that others are engaged in building the same business and they are friendly towards you. They'll help you if you ask them. Perhaps the greatest benefit today is cost-savings. If you're one of ten franchisees in a market, your advertising costs may be 1/10^th of what your non-franchise competitors have to pay. Plus, you will be able to buy products and services from suppliers for less money because there are more of you buying those products and services. Vendors like selling to franchisees, even at a discount.

If franchising makes sense for you, it may be your ticket to the American Dream. But only you can make the decision. Start by doing your homework. Then select a franchisor that provides at least these 9 good reasons and more to join them!