Since it’s so difficult for a new business to succeed in any market, why do people bother at all? The vast answer is to be part of the 10% that do not only succeed in building a successful business but also creates a better life for its owners.
If you have a phobia for starting a new business because of the high risk of failure involved, there’s an easy way out. And that’s buying a franchise.
First things first…
What Is A Franchise?
A franchise is a form of a joint venture that is contracted between a franchiser and a franchisee. The franchiser, in this case, is the original business which is already successful in the market, and then goes on to sell its rights to other businesses to use its name and idea in other markets.
Great examples of successful franchises are Kentucky Fried Chicken (KFC), McDonalds, Dominos Pizza, and much more.
How then is buying a franchise better than starting a new business? To answer this, here are 5 reasons buying a franchise is better than starting a new business:
1). A Franchise Already Has An Established Business Model:
When you start a new business, you have to figure everything out from scratch, and this involves losing a lot of money in multiple trials and errors which you may never get back. But when you buy a franchise, you are building a business based on a well-established model, which would inherently lead to a higher success rate for your business.
2). A Franchise Already Has An Established Brand:
A franchise brings the added benefits of an established brand from day one which usually takes many months, and especially years for the average business to build. What this means is that customers already know who you are and what product & service you offer before you even setup shop. And this means that you’re tapping into an existing customer sales pool from the minute the community knows you’re open.
3). You Can Easily Raise A Loan Or Investment To Buy A Franchise:
Since Franchises are based off successful business models and established brands, securing financing to buy a franchise is a lot easier than securing financing to start a new business.
Here, the bank or investor can easily go through the public records of the parent company to see how they’ve been doing over the years. They can further even check their credit ratings and can quickly decide whether to fund you or not based on how well-accepted they are in the market and how experienced you are in sales, marketing, and business development.
4). You Don’t Need A Wide Business Background To Start A Franchise:
Since a franchise already has an established model, you’re going to be working and answering to an experienced support system whom already has a mode of operation for every single branch of their business. This means that you don’t need to invent any new way of marketing but to rather operate based on the company’s proven strategies for growth to succeed in your region.
5). It’s Less Expensive To Buy A Franchise:
While there’s a fee to buy a franchise and an ongoing fee to pay either monthly, quarterly, or yearly, buying and paying the ongoing fees can be a lot cheaper than starting and running a new business.
The reality is the amount of money that is usually required to have a new business take off is usually very high because of the limitless uncertainties that abound. The new business owners would have to spend a lot of money to test different products in the market, spend even more on marketing, and if they’re lucky or are on the right track, should turn a profit in two years.
With a franchise, you will have a detailed outline of what the costs are expected to be, so that you will know what to expect and what not to expect, thus saving you valuable time and money.
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