Many entrepreneurs dream about building a company from the ground up. But for many aspiring business owners, a startup isn't a realistic goal--instead, a less risky path to success is to buy into a proven business model with growth potential. The prospective buyer has three options to do this: buy an established independent business, buy an established franchise location, or buy a new franchise location.
The acquisition of a franchise (either a new or existing location) has several advantages over the purchase of an independent small business.
Buying into a Franchise
The acquisition of a franchise mitigates risks and provides several important benefits for would-be franchisees, including:
While launching any business always includes an element of uncertainty, owners purchasing a franchise can mitigate risk by knowing the brand is already well known amongst their target audience. While different franchises certainly have different levels of awareness, owners can at least be confident that the product or service has proven successful elsewhere.
Instead of guessing at projected earnings, buyers should have access to other locations' average financial benchmarks, providing valuable insights about cash flow and the actual financial performance.
Operating Systems In Place
One advantage of buying an existing business, either franchise or independent, is that the business has an established client base, operating history, and a business plan in place. Unfortunately, however, many independent business owners keep those plans in their head and many not have a documented how-to for new owners.
Franchises have gone through those procedures already, giving new owners a well-thought out, already successful operating system. Essentially, the mistakes have already been made and new owners can avoid those common early mishaps. Buyers of existing, operating franchise locations will additionally benefit from an established client base which can be further grown.
One of the top reasons buyers enjoy the franchise experience is the availability of a support team. The franchisors shared concern for your success means that you are in the business for yourself, but not necessarily by yourself. Franchisors provide quality training for you and your staff, a corporate team to help you with questions or concerns and even the marketing support you may not be able to afford on your own. Especially for first time business owners, it can be very reassuring knowing there is someone to turn to for help.
While there are always risks in any new business venture, purchasing a franchise limits some of the concerns independent businesses carry. The established brand awareness, franchisor operating procedures, and ongoing support can help you get up to speed and comfortable quickly. And by building on the success of the brand, you can position yourself for growth and the possibility of adding new locations to your franchising portfolio in the future.