The Advantages and Challenges of Franchising

If you're considering taking the franchise route, you'll need to be prepared to do plenty of research. Franchising is a specific business model that relies on a consistent and proven business system and brand. For some entrepreneurs who prefer the individualistic approach and think that they can do better alone, franchising may not be ideal. However, for those who want to buy into a proven model and work hard to share in its success within a franchised business that they own themselves, it can be rewarding and highly attractive.

Many of the features of franchising are either an advantage or a challenge, depending on your perspective and on how you view them.

A Proven Business System

If the idea of adopting a proven and successful business system and focusing on how to implement it within your territory or unit to provide you with rapid business growth is something you relish, then a franchise might well be ideal for you. If, on the other hand, you feel that your skills and talents are in innovating and creating new and different ways of doing things and building your own independent empire, then you may prefer to satisfy your entrepreneurial streak by creating your own business from scratch. Remember, though, that all franchises require entrepreneurialism the ability to bring in customers, to build a local market, to successfully operate your new business and help it grow profitability. So the franchise model will support rather than hinder you.

A Wider Network

When you buy into a franchise, you become part of an established network. This enthuses franchisees, who recognise the value of being part of something bigger. They enjoy the best of both worlds the chance to own their own business while having the support and guidance of the franchisor. The network gives new entrepreneurs a valuable network of other franchisees and they can share experiences, build their contacts and learn together.

The Franchise Offers Economies of Scale

Many small businesses struggle to get attractive deals from suppliers because they aren't large enough to win economies of scale. But the power of the franchise facilitates better deals through group-buying power. This means that many raw materials or other input costs may be more competitive than an individual business person could achieve on their own. You also instantly have a panel of tried and trusted suppliers to use. However, for some this is restrictive and they prefer to build up their own lists locally. Consider what would work for you and whether you value independence over structure.

Brand Recognition

Buying into a franchise means buying into a recognised business system and a recognised customer brand. You automatically benefit from customer recognition and don't need to invest as heavily in launching a brand in your territory as you would with a start-up independent business. For many potential franchisees who are keen to launch and focus on their new franchise's growth, the existence of an established brand is highly attractive and a real selling point. There is likely to be a central pot for pooled marketing and the support of a centralised marketing team who will manage national and perhaps regional marketing activity at a high level. However, others may want the satisfaction and risk of setting up their own brand and creating a business according to their own vision. They might well dream of creating their own business to franchise one day and, if so, they are likely to want the creative freedom that comes from starting up independently.

You'll Have Someone Telling You What to Do

This is perhaps the acid test as to whether a franchise is right for you. A franchisor will be guiding your activities and providing training on the business model, how you operate your business. There will be strict standards and targets to work towards. This will give you structure, support, a tried and tested methodology and a wider network of fellow franchisees to tap into. This can be very important for those who might otherwise feel isolated working for themselves in a start-up. However, for others the prospect of this structure and support is the very thing that puts them off and convinces them that the independent route would better suit their ambitions