Council Post: Looking For A Business To Buy? Three Reasons To Consider Franchising

CEO of Frannexus, award-winning franchise consultant and author of “Profits are Better Than Wages“.

Starting your own business from scratch can be both liberating and scary at the same time. With so many industries out there, choosing a specific one can sometimes be a daunting task. In general, you either have to start your own business entirely from the ground up, following the traditional business model, or you can decide to buy a franchise, which allows you to build on an existing franchisor. Traditional businesses, or “mom and pop shops,” differ from owning a franchise, and although each has advantages and disadvantages, these are three reasons to consider owning a franchise.

1. In Business For Yourself, Not By Yourself

Many employees get stuck doing what they do because they fear having to switch industries and learn an entirely new trade from the start. When you own a franchise, you don’t have to reinvent the wheel or have any specific experience. Most franchisors help by offering extensive training and support to help you understand the business model and how things operate. 

It is to the franchisor’s advantage to ensure that you are up to speed because ultimately, you will represent their brand. When you buy into a franchise, you are also buying into the experience and the success that comes with many years of on-the-job training and trial and error. The blood, sweat and tears and the costs of branding, marketing and building customer loyalty have already been paid by those who came before you. 

2. Proven Systems And Business Model

According to the U.S. Bureau of Labor Statistics, 20% of all new businesses don’t make it within the first two years of operations, and approximately 45% fail within the first five. Only 20%-25% of all new businesses continue to succeed for 15 years or more. According to Statista, at the end of 2019, there were 773,603 franchises in America, producing almost $800 billion a year and employing nearly 9 million workers. So, although opening a business comes with inherent risks, regardless of the model you choose, and owning a franchise doesn’t in and of itself guarantee that you will be a success, it does lower the risk that you won’t be.

However, in my experience consulting franchise operators, franchise businesses differ in that they are already following a proven model for success. Franchise business models have been challenged and have an established track record of excelling. That is also why I’ve found that my clients tend to have an easier time obtaining a loan for a franchise versus a standard or independent business loan. Often, banks understand that a franchise is a much less risky endeavor than beginning anew.

3. Growth Potential Scalability

When you own a franchise, you aren’t limited by how much growth potential you have individually. With many franchise opportunities, you have limitless potential to grow. Scalability is a business’s limit based on how much they can sell or grow in an industry. If you choose a unique franchise with unlimited scalability, then your growth potential is boundless.

How To Get Started Exploring Franchise Ownership

When exploring franchise ownership, the most critical factor to consider is the “three D’s.”

1. Due Diligence

There are many franchises to own in every industry imaginable, but to be a successful business owner, you have to understand whether you can afford it, the legalities of owning it, whether the franchise has a proven track record for its franchise owners, whether it has options like scalability, and whether the growth potential is limited or unlimited. 

Knowing everything before you decide is critical to making the right choice. With so many different types of franchises to look through, explore them all and make sure you look underneath the hood to see how the engine is operating.

2. Deliberation

You want to own your own business for many reasons, but likely chief among them is that you want to be both monetarily successful and happy. Before deciding what type of franchise you want to operate, it is essential to do some introspection. Evaluate where your strengths and weaknesses are. For example, are you good at managing people? Are you willing to follow franchise rules without fail?

Also, take stock of what you enjoy. Franchise owning might come with many advantages, but it is still a business that will likely take a lot of your time and energy. So, it is essential that you find out what makes you tick and find a position that will bring out the best and happiest you for the long term. Lastly, think about what type of personality style you have. Are you an introvert or an extrovert? Your personal qualities will play heavily in both your achievements and your overall satisfaction.

3. Don’t Go It Alone

What type of support do you have to help you through this endeavor? Owning and operating a franchise is more than a full-time job and requires you to spend a large portion of your time and enthusiasm making it work. 

To be a successful owner, it is essential to have the support of both family members and friends who will work with you, not against your ability to achieve great things. Make sure that everyone is on board and understands what it will take for a harmonious life.

Opening your own business is always a scary endeavor, but when you open a franchise, things have the potential to go more smoothly, with less risk. It will help you find something that makes your professional heart sing. If you take the time to learn what makes you tick and do the research to match your personality and strengths of an unlimited franchise opportunity — the sky is the limit.

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