Franchising as a Successful Business Model
In launching every small business, entrepreneurs want to maximize their rewards and minimize their risks. It is simply the name of the game. Of course, many business models share a higher success rate than others. Independent startup businesses are more likely to shutdown within a year due to poor planning, poor market research, and not implementing a thorough approach.
The hallmark feature of a franchise is minimizing risk. Study after study, non-franchise businesses have proven one thing – its extremely risky, with a whopping 90% of them failing within the first three years of their inception. One bona fide reason why this happens is because owners are often inexperienced folk with a steep learning curve to climb. In today’s economy, competition devours any rookie business owner who wants to compete with it. Playing your hand against more competitive businesses in your area can pay a lot of consequences, like losing your initial investments, blowing up your credit record, losing your home, and to the egos: throwing your reputation out the window. Unfortunately, thousands of incoming entrepreneurs strike out competing in this high stakes game. If you can promise you have ample experience running and operating the business you plan to start, you have a better chance.
The highest probability of success comes through franchising. Franchising startups almost never fail because of an already established operating and marketing system in place to help the franchisee extend his brand. The learning curve has already been conquered here using protocol that has been tested through time to produce a formula that works unit after unit. All secrets to the business have already been realized. Because of this knowledge, entrepreneurs choose to invest in franchises.
Another plus side of investing in a franchise is that you can research it way before investments are laid down. With an independent business, its hard to gather information on the business since its more exclusive. franchisers already have information on hand for you on things like preparing a business plan to character assessments. Heavier questions like “have you been trained the right way” or “how long did it take to turn a profit” can be asked. The same cannot be said for an independent business. Get a truer sense of the franchise business before diving in.
The nature of franchising is rapid growth. Since franchisees come up with expansion money, the sky is the limit when it comes to number of franchise units the market can hold. As more franchisees invest into the business, better brand recognition begins to formulate which gives the aura of success. The more Chili’s there are in Southwest Texas, the more successful it must be. As the number of units increase, better advertising campaigns flourish as a result since each unit contributes – leading to sales and more sales. This produces a chain effect of success, knocking out competition along the way through rapid growth. Franchises can also take advantage of buying products in bulk at special discounts, tools which it passes on to franchisees.
Remember, the purpose of franchising is to lessen risk and boost the chances of success. It is a well-oiled business model with the potential for excellent results. Back to Table of Contents |
