A franchise gives you business support.
If you're contemplating opening a new business, you'll be confronted with a range of options, each of which represents a different level of risk -- and potential profit. A franchise can be a sound choice if you want to minimize your personal risk, and feel the need for some guidance and support in the process of business development.
Track Record
When you run a franchise, you own your own business, but the merchandise, advertising and brand name are provided to you by a company that already exists. One of the many advantages of this arrangement is that the mistakes have already been made by someone else, and a workable business model has been pre-developed for your use. Many businesses fail during their vulnerable first few years, as they try to build up a client base that recognizes their brand. By buying into a franchise, you board a business train that already has momentum, and is already recognized and accepted by the public.
Brand Recognition
Brand recognition can go a long way toward making a business successful. Many people are creatures of habit, and will do something simply because they've done it before. This applies to shopping as much as anything else. If you own a Dunkin' Donuts, 7-11, or McDonald's franchise, you'll receive customers who wouldn't patronize your store if it was called Bob's Donuts, Phil's Convenience, or Harriet's Burgers. People will come because they recognize the brand and know what to expect. A franchise that provides a recognizable brand is catering to the desires of a ready-made clientele.
Training
Most franchise businesses include training in their business agreement with franchisees. As the buyer of a franchise, this is to your advantage, because it will help you and your staff get up to speed with the expectations and standards of the parent company. It is to the company's advantage to train you as well, because your superior performance in the new franchise will help to maintain high public opinion of the brand. If you were opening an independent store or restaurant, this kind of training would be difficult to come by, and would probably cost you a fair amount of money.
Bulk Prices
Large franchise chains go through enormous quantities of merchandise, supplies and food. Because of this, they're able to command lower prices from suppliers, and pass some of these savings on to their franchisees. Getting supplies at a lower price will allow you, as a retailer, to pass those savings on to your customers, or to maintain prices and increase your profit margins. Price breaks can make the difference between success and failure in competitive industries, where profit margins are very slim.
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