Think of your favorite fashion store- are there different locations? Is it actually available in different countries?
If your answer is yes for both, that is likely because it’s a franchise. There generally remains a primary business owner, but basically independent parties have opened their own locations and bought into the business. So rather than one person managing huge number of sites (maybe from hundreds and thousands) each individual store may have a different manager and they may follow the same rules.
People generally tend to choose this type of business model since they want to build business experience without falling into any risk of establishing a small business from the very beginning.
What are the Risks involved in Franchising?
1 Capital Requirements
2 Regulatory Risks
3 Too much Franchise Vultures
But all the above lists of risks can’t make you stand still to expand your locations
How?
Lower risk involved while commencing a new business:
Buying a franchise comes with lower risk than starting a business from start, as the examination of new ventures has already been processed. With the help of a franchise you are implementing new process and working with proven strategies.
Support system from franchise owner
Basically franchisers provide great support and train franchisees to make sure you recognize their business model and operational system of stores. Additionally, their years of expertise will help you strengthen your business acumen under their guidance, something you not often get if you begin your business.
Existing brand awareness and customer base:
One of the main reasons to buy a franchise is that it already has existing customer base and has brand awareness. Having a franchise, the target audience is already active and established, and since they know the expectation, the verdict of doing business with you becomes easy. As a result, it also takes lower time to start generating profits.
Hence the chance of attracting big talent and employees becomes easier with existing brand recognition.
Little to no industry expertise is required:
Whilst it is crucial to have business awareness, no specific industry expertise is necessary. You are buying into an established business, and the franchiser will give you industry related training that will enhance your skills to get a job.
Get higher profits:
There are initial startup costs and franchise fees involved despite the initial startup costs. The franchised business witnesses’ higher return easily compared to independent businesses. This process sees many recognizable brands and proven business models accumulating more profit.
Resource access:
Possessing a franchise gives you entry to variety of tools and resources that can help you run your business more efficiently. This can include almost everything from training programs and marketing materials to technology and software systems. With almost all of these resources, you can focus on building your business, rather than be anxious about the technical features of running a business.
If you are hoping to produce better knowledge and build skills, buying a franchise would be a valuable choice. Thus franchise pays off the risk very well and hence start franchising.