If purchasing a franchise is the right choice for you, SBA loans are a financing option to consider.
Buying a franchise grants you many of the benefits of starting an independent business. As with any decision, there are trade-offs.
Advantages of Buying a Franchise vs. Starting Your Own Business
Do you dream of becoming a business owner, but the notion of creating a business from scratch is daunting or doesn’t quite align with your skills and career goals? Purchasing a franchise may be a good fit for you.
Some of the advantages of buying a franchise include:
1. Acquiring a business name with an established reputation and brand awareness
If you start your own business, you’ll have to develop your brand, build and implement marketing plans to create brand awareness from scratch, and work to bring in new customers, all without an established reputation. You can skip this step entirely by purchasing a franchise. Many consumers will already be aware of your business name and products or services. At least a portion of your marketing will occur at the company level to attract new customers to the brand’s products or services. This base of existing potential customers can be a reassuring perk and shorten your time to profitability.
2. Being provided a tested system and business model
Franchises have a demonstrated track record of success. From the get-go, you’ll be provided with all the details you need to put your operations in place. You won’t have to wonder whether the business model will work because it already has. You won’t have to research suppliers and establish vendor relationships because the supply chain is typically part of the franchise’s established processes. Product or service offerings are defined along with the pricing guidelines. Marketing and sales collateral are already designed. With all of these elements provided, the upfront investment may feel like it is more expensive than creating a business from scratch, but with the economies of scale for the supply chain and marketing, this foundation can provide a strong start and long-term stability for new franchisees.
3. Leveraging an existing training program and technical support
Franchises provide robust training programs and technical support to get franchisees started. This gives you access to the materials so that both you and your employees can learn what you need to do your jobs. The technical support team can answer those questions you may have and clarify anything you may not quite understand. Together, you gain the support needed to operate a prosperous business – with no need for trial and error.
4. Transitioning to retirement may be easier
When retirement comes calling, franchisees may have a simpler path forward than independent business owners. You can sell your franchise to another aspiring franchisee using the same benefits that attracted you to the franchise, such as brand recognition and established systems, to help drive the sale.
The Trade-Offs
With every choice you make, there are always trade-offs. Those advantages to buying a franchise may be the same reasons it may not be a fit for you:
1. The brand may evoke strong feelings in the marketplace – and some may not be positive
Many established brands are well-known, beloved names. That history can also provide the opportunity for perceptions and misconceptions to arise that drive strong impressions of the brand. As a franchisee, your business will be viewed through the same lens as they view the brand or franchisor.
2. The established systems and business model can be constraining
As a franchisee, you must follow the guidelines for branding and operations established by the contract. You may feel restrained by these rules if you value creativity and autonomy. Though you may be trading away creativity, you are gaining a pathway to success marked with specific guideposts.
3. The training program may not be flexible enough to meet your specific needs
The standardization of the training programs may feel a bit like one-size-fits-all clothing: it doesn’t actually fit anyone particularly well. You and your team may not find it particularly useful for your franchise location, and you may need to adapt it to fit your needs.
4. The reasons you bought the franchise may now make it difficult to sell
Brands have a life cycle. By the time you are ready to retire, the brand may no longer be as attractive to potential buyers or command the same type of investment that you initially made.
But, you may find that the brand has grown in popularity – you just don’t know today.
With the trade-offs in mind, does purchasing a franchise sound like the right choice for you? If so, you’ll want to look at SBA loans to fund your plans.
