Building your own business from scratch can be intimidating, right?
From limited funds to the stressful marketing of a startup, it’s no surprise why 80 percent of new entrepreneurs fail in their first two years of launching their businesses. But, what if you launched your business in partnership with an already successful brand?
This would save you the costly mistakes that start-up entrepreneurs make and eventually increase your odds of success.
That’s the whole idea behind starting franchises! For an in-depth understanding, let’s look into how this “partnership” works:
How Franchises Work
Basically, a franchise is a form of collaboration between two businesses, where one of the businesses (franchisor) shows the other one (franchisee) how to replicate business success.
For example, if you’re in the gas industry, you can learn more here about propane tank sizes, sales, and uses from an already established industry leader.
However, the franchisee uses their own products and staff but under the umbrella of the established business. It also pays an initial fee and monthly royalties, and in return, uses the bigger brand’s system of doing business to scale up sales.
Benefits of Starting Franchises
Here’s how your business benefits from a franchising opportunity:
1. Lower Start-Up Cost
Although franchises may be a little bit expensive to start, they’re more cost-effective compared to starting a business from the ground up. The franchisor settles some of the upfront costs, leaving more money to invest in other essential aspects of your business.
Moreover, it’s easier to finance your business as a franchisee, since most lenders tend to trust established brands more than upcoming ones.
2. Brand Recognition
One of the biggest advantages of collaborating with a franchisor is that you no longer have to worry about marketing your brand. Your business will enjoy the brand recognition of the franchisor, which boosts your sales and attracts more customers.
In addition to brand recognition, it becomes easy to expand your business. This is due to the fact that bigger brands usually have a wide and ready market, meaning you can open more outlets for your business.
Most franchisors offer continuous support to their franchises all through the franchise agreement. This is not only in terms of finances but also resources such as the tools for running your business. They can help with pretty much everything, including employee training and customer service.
Besides, it helps to know you have an experienced partner who got your back!
Common Mistakes When Starting Franchises
Although franchising opportunities may seem lucrative, losses can also be incurred due to these common mistakes:
Failing to Do Thorough Research
In order to make a good franchise investment, you need to shop around for different franchise opportunities from prospective investors. This gives you an opportunity to compare what’s offered and choose the best one for your business.
Not Involving a Lawyer
Since a franchise involves a legally binding agreement between two businesses, you definitely need an attorney to help you understand all the terms stipulated in the franchise disclosure document.
Grow Your Business by Franchising
Starting franchises is now the norm for businesses looking to boost their growth. So, ensure you utilize the benefits of franchising today!
Want to learn more about start-ups, franchising, and marketing? Explore our business archives to learn even more about getting your business off the ground.