Why would you buy a franchise rather than start your own business?

‘Franchising’ is almost a dirty word in business, but since we have started franchising The Business Growth Show we have a lot of demand and support. We turned to our partners Business For Profit and Business Link for some third party advice for those thinking of starting up a franchise:

Business For Profit: A franchise reduces the risk of failure

Franchising is a fantastic way to start and run your own business – it provides you with an opportunity to earn a high income but with the support and backup of the franchisor behind you.

Starting a new business always carries a risk – new businesses are vulnerable. The degrees of vulnerability vary depending on:
• Knowledge
• Skill
• Financial resources
• Relevant abilities

Many who start up their own business lack some or all of these qualities. Many fail because they cannot learn quickly enough – before the money runs out. 80% of new businesses starting today will fail within the first five years.

With a franchise this risk is substantially reduced – because you are buying the experience and expertise of the franchisor. This will also stop you making the same mistakes that they have made during their trading life.

And because you become part of a successful business, you will be able to take advantage of their knowledge and link into the strong relationships that they have developed over the years.

Other franchise benefits

Essentially, a franchise provides the opportunity to earn a high income working for yourself but with the training, support and experience of an established business behind you.

You are selling an established product or service with a turnkey business plan and format for you to operate. This includes the brand, systems and processes, lead generation and marketing assistance plus help with raising finance if required.

Business Link: Advantages and disadvantages of franchising

Buying a franchise can be a quick way to set up your own business without starting from scratch. But there are also a number of drawbacks.

Advantages

• Your business is based on a proven idea. You can check how successful other franchises are before committing yourself.
• You can use a recognised brand name and trade marks. You benefit from any advertising or promotion by the owner of the franchise - the 'franchisor'.
• The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice.
• You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory.
• Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation.
• You benefit from communicating and sharing ideas with and receiving support from other franchisees in the network
• Relationships with suppliers have already been established.

Disadvantages

• Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor.
• The franchise agreement usually includes restrictions on how you run the business. You might not be able to make changes to suit your local market.
• The franchisor might go out of business.
• Other franchisees could give the brand a bad reputation.
• You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor.
• All profits are shared with the franchisor

Thanks to Business Link and Business For Profit for their views. If you would like to find out more about The Business Growth Show franchise and what we are offering, click here!