How Franchising Can Make It Easier To Start Your Business

Starting a business can be a major lifestyle switch. Deciding to start a business is the first step, but what next? New entrepreneurs tend to find the learning …

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Starting a business can be a major lifestyle switch. Deciding to start a business is the first step, but what next? New entrepreneurs tend to find the learning curve steep, and it can take time to re-establish a work-life balance from the early stages. Part of the problem is often a lack of knowledge or experience, either in the sector or in the art of running a profitable business. For those who want to create a business of their own but feel clueless as to where to go next, a franchise could be the answer. Franchise businesses can help entrepreneurs benefit from running a recognized, branded outlet, making the transition into self-employment much smoother.

Franchises are businesses that sell individual licenses to entrepreneurs, granting the right to trade with a certain business identity in a particular geographic area. McDonalds is the classic example, with franchised outlets across the world. This enables McDonalds to expand its reach commercially, while achieving vast rates of growth relative to self-funded expansion. For franchise owners, the opportunity to run a McDonalds restaurant often proves a safer investment than starting an independent burger restaurant, for example.

The franchise agreement grants the buyer the right to trade as the franchisor in their particular location. This has a number of advantages over starting from scratch. The value in a franchise comes from its reputation and profile, and many of the world’s biggest franchises are instantly recognizable thanks to generations of branding and promotional efforts. This carries goodwill, reputation and even a readymade customer base – an incredible benefit versus starting from the beginning.

It is not just the goodwill that comes with a franchise agreement. Buyers also get access to recognizable products, services and operating procedures, all of which will have been demonstrated to work effectively. An innovative idea, like the Little Gym Franchise, might allow the franchise holder access to a hot selling product or service. The benefit of the franchise is the readymade business model, which is essentially what you are buying into. You run the business, but the model is already absolutely defined and proven to generate returns in other areas. For this reason, franchises are generally considered less risky opportunities than new businesses in the eyes of funders.

Another major benefit of franchising comes from the cumulative marketing effect. Generally, franchisees will pay a share of their revenue to the parent, as part of their ongoing licensing agreement. This is often invested in marketing for the company as a whole, which has benefits for every franchisee individually. This group effect allows for companies to benefit from more extensive exposure, which can be another positive factor in driving sales through a franchise agreement.

Franchising has long been considered a safer alternative to starting a new business. By finding a franchise with a proven track record, it can be possible to keep the risks low while providing opportunities for more significant returns on your investment.

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