Economic Development News
Published: Tuesday, September 25, 2018
The business world is evolving and franchises are no exception. Once thought of as the "f" word, franchises are now an accepted and appealing way to enter the small business world. Small business ownership can be daunting as a new owner tries to set up the right systems; operational and electronic, understand the market, choose the right advertising, hire the right people, be the face of the company and more! There are more options open to entrepreneurs these days that did not exist 20 years ago. The ease of buying a franchise and the types of franchises has made them more of an option.
Why is opening a franchise now more accepted?
The franchise world has evolved and today those who want to enter the business world can do so at minimal cost (as low as $10,000) and in almost any area they see a niche or have a passion. The success rate of franchises is much higher than opening a new small business which also lends to the credibility of franchises. The statistics show us that 80% of franchises are still open after 5 years whereas the success rate for a new business is 30 percent.
What are some of the benefits of owning a franchise?
- Franchises offer the independence of small business ownership supported by the benefits of a big business network. The systems are proven and only need to be implemented.
- You don't necessarily need business experience to run a franchise. Franchisors usually provide the training you need to operate their business model.
- Franchises have a higher rate of success than start-up businesses.
- You may find it easier to secure finance for a franchise. It may cost less to buy a franchise than start your own business of the same type.
- Franchises often have an established reputation and image, proven management and work practices, access to national advertising and ongoing support.
What are the potential drawbacks of owning a franchise?
- When you decide to open a franchise, you will be entering into a legal contract that stipulates how the business will be run, who will be your suppliers, the type of products/services you will offer, etc. This is to keep you on the proven path and help set you up for success however, it can limit your creativity in your business.
- The bad performance of another franchise owner may reflect negatively on your business.
Purchasing a franchise is a relatively easy way of entering the small business world. It is also an easier way of growing your business when you are ready. But, franchising is no guarantee of success and the same principles of good management - such as informed decision-making, hard work, time management, having enough money and serving your customers well - still apply.
Other benefits of franchises: Many franchises offer discounts to the military and their spouses. Local small business owners tend to be more invested in their community than large box stores. See a need in your community? Whether it is entertainment for kids, professional services, dining specialty, or retail niche, there is probably a franchise to meet that need thus helping to expand the offerings and contributing to the growth and appeal of your community.
Do you have a successful business and are looking for ways to grow? Creating a franchise of your business is one option for growth that puts the investment, hiring, and time in the hands of the franchisee (buyer.)
The Jefferson City Area Chamber of Commerce and Transworld Business Advisors of Central Missouri will be hosting "Franchising 101" during the Business and Lifestyles Expo on October 24th starting at 1:00pm at Capitol Plaza. A short 15-minute presentation will be held every 30 minutes to provide an overview of buying and/or creating a franchise. We hope to see you there!