Franchises
Stand The Best Chance
For Business Success
The Department of Commerce reports that, since 1971, less than 5 percent of franchised outlets have failed or been discontinued each year. In the past, less than 3 percent of business format franchise owned outlets were discontinued- many for reasons other than business failure. By contrast, the U.S. Small Business Administration has reported that 65 percent of independent business start-ups fail within five years.
Thus, it is apparent that franchises offer advantages and stand the best chance for business success. A franchise offers the advantage of owning and operating your own business with all the benefits that established companies enjoy.
However, there are many reasons why franchising is the best type of operation for the majority of first-time business owners. Most revolve around increased profitability franchises can offer within a shorter time frame relative to an independent business. Yet, there are a host of factors which contribute to this success including: Lower Costs Than an Existing Business:
When buying an existing company, you will usually pay the seller 2.5 to 3.5 times its earnings. Starting a franchise is almost always less expensive. Less Risk Than an Independent Start-Up: Napoleon Hill, in his classic book "Think & Grow Rich" suggests that one spend 3 to 5 years as an apprentice in an industry before considering owning a venture in that field. Buying a franchise eliminates this need and puts you on the road to success quickly.
Gain Advice on Site Selection, Unit Design, Operations, Capitalization and Marketing: A good franchisor provides instruction and support on ALL aspects of running a business in its industry. It's as though you are hired and trained to open a branch for a major national company --Except that you OWN the "branch".
Receive a Proven, Profitable System for Doing Business: When you've had a chance to talk to other franchisees, you'll recognize how important it is to have a system to follow for your venture. This plan is easily worth $100,000 or more. Luckily, franchisors typically charge 12 to 25,000 dollars for an initial fee (similar to a down payment) and then accept a percentage of sales as an ongoing royalty for the use of their name and business system. These are good investments in return for the improved probability of success; the quicker sales growth curve; the research and development of future products and services offered by the franchisor; and the business plan itself.
Benefit from Quality Research & Development: Most small business owners are just too busy making money to research the future trends in the industry and develop new products or services to meet the needs of their customers. A franchisor will always be searching for ways to make its network more successful.
Gain Access to Trained Support Personnel: Your royalties and advertising fees provide regular improvements in the franchisor's systems and these are provided to you for implementation in your venture. Quicker Start-Up Than Independents: A proven plan out paces an independent?s hit & miss operation almost every time. Looking at just independents that succeed--you'll find that franchises grow quicker, reach break-even sooner and succeed more regularly than others in the same industry.
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