Advantages of Franchising

As defined by known franchising experts, the advantages of franchising and the top seven (7) reasons you should consider buying one are as follows:

 

Less risk

The greatest advantage of a franchise system is that it reduces risk of business failure. This is due to the fact that an ethical franchisor will have a tried, tested and proven business concept in the market place. It is a well-known fact that less than 7% of franchise owners fail within the first 3 years, as compared to over 90% of new business start-ups.

 

Competitive edge

Franchising enables a small businessman to compete with big businesses and a Franchisee can take advantage of the economies of scale. All franchisees acting together can buy more cheaply and on better terms than an individual small business. Add to this, the Franchisor’s reputation in the industry, the Franchisee can trade under a recognized brand and should have a distinct advantage over any independent small business competitor.

In theory at least, the products, equipment and system will have been previously market tested and therefore they come to the franchisee with a certain degree of 'ready acceptance' by the consumer.

 

Training and Support

Through training imparted by the franchisor, the franchisee climbs a very steep learning curve in a very short period of time, thereby increasing their chances of succeeding considerably. For example, someone who wishes to set up a dress hire business would find it very difficult to get the stock mix right at the outset. A franchisee, however, should have the benefit of his/her franchisor’s experience and should receive advice on the range and mix of the stock to carry etc.

The franchisee has the benefit of the management and administrative experience of the franchisor in addition to which most franchisors provide back up and support including troubleshooting services to assist franchisees in their daily endeavors. This support includes managerial and administrative services, product information and marketing support

 

No previous experience needed

No previous experience in a particular business is necessary for a franchisee to operate it. All deficiencies of know-how are made good, again, by training imparted by the franchisor. Indeed, one of the proudest boasts of franchisors is that they have the ability to turn a butcher, baker or candlestick maker into a fryer of chicken, dry cleaner or quick print shop operator. Any lack of knowledge on how to run a business is not a problem as a franchisor will provide the necessary training to the franchisee.

 

Hit the ground running

Franchisees “hit the ground running” when they open a franchised outlet as they enter the market with a recognized brand name, proven business system and products and or services which have been market tested.

 

Pooled resources

A franchisee has the ostensible backing of a large organization and this is achieved by the pooling of resources, particularly in the field of advertising, marketing and promotions where each franchisee, by contributing a little, can have the benefit of a large fund for this purpose. Franchisees are therefore able to have their goods and services promoted through media, which would otherwise be closed to them. In a well-run and structured franchise business, the franchisee is left to concentrate on selling the goods or services while at the same time receiving the benefit of continuous market research and development to improve the business and the franchised system.

 

Exclusive territory

In many cases franchisees are given exclusive territorial rights and this, in effect, gives them a monopoly over the area allocated to them, certainly in terms of doing business under the franchisor’s trade name.
 

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