Franchise Article

For many people who are looking for a good investment, a nice change of scenery or perhaps just an escape from the grind at a dead end job, the prospect of starting your own company will undoubtedly seem very attractive.  Maybe you have considered starting a new business from scratch and had a tough time raising funds, putting together a strong business plan or coming up with that winning idea for your company.  If any of this sounds familiar, consider that a franchise may be the best option to get you into your own company and to give you the best possible chance to succeed.  A franchise is like a business for sale in which you, the franchisee, buys a franchise from the franchisor.  Basically it comes down to a successful company who decides to become a chain and takes applications from prospective business owners wishing to join their team.  The great part about owning and operating a franchise is that you will still retain many of the benefits of starting a small business from the ground up but you will avoid many of the financial dangers of going out on a limb to start your own company. On average, franchises are about five times more likely to still be in business after ten years than a typical small business.  If you are considering a franchise opportunity, you will need to know that basics and what types of franchises are available to the budding entrepreneur.

Investment Franchises will typically require the highest investment up front but are also the most likely to generate large profits due to their well known brand names, streamlined training and support systems and, generally speaking, decades of experience.  Investment franchises will also invariably result in hiring others to manage specific locations while the franchisee directs the overall vision and direction for each location.  Examples of investment franchises include fast-food restaurants, hotel chains or coffee shops. 

Management Franchises are generally site-specific businesses where the franchisee controls regions or territories.  These franchises include such businesses as landscaping, home repair or other on-location type businesses where territorial distinctions would be required.

Executive Franchises are typically white-collar, service businesses in which the product up for sale is generally some type of training, coaching or consulting.  These businesses are becoming increasingly popular among large firms across the globe and offer a great potential for high revenue with very little overhead.

Retail Franchises involve commercial locations and are typically operated or managed by the franchisee.  Examples of retail franchises may include boutique shops, electronics/video game store or high street fashion.  Many retail franchises will appreciate in value over time, assuming the company does well, and can generally be sold for a profit.

Sales/Distribution Franchises, like management franchises, are territorial but consist mainly of sales and distribution of goods rather than services.  Sales/Distribution franchises are quite easy to expand as the company grows due to the nature of sales both locally and door-to-door in that the more you sell, the bigger your company will become.

Mobile Servicing Franchises are businesses with a very low cost of ownership making them very attractive to younger or first time entrepreneurs.  These are typically operated by the franchisee and look less like a brick and mortar store and more like a service such as cleaning or computer repair allowing the franchisee to spend less money on property and expenses and use that money for advertising or furthering the business.

While a franchise is not a guarantee that your business will succeed, statistics show that franchises are not only more likely to succeed than a startup business but also will typically generate more profit in the first year than other small businesses.  Knowing what you want is critical if you are considering a franchise as buying a franchise is essentially a “business marriage” between you and the parent company and you need to make sure that you choose the right company before you invest your time, money and freedom.  Once you know what type of franchise to pursue, evaluate which company is the best for you based on your personal values, interests and the level of investment that you are comfortable with.  Remember that although with a franchise you are essentially buying a business, you are still in control of your business and that you will be the biggest deciding factor in whether your business will succeed or fail.