A franchise business is a company owned and run by you but supervised by someone else. This means you have to follow the policies and procedures of that company, the so-called franchisor. Opening a franchise store is an excellent opportunity to start a business on your own if you’re a bit gun-shy. Starting a franchise business implies entering the company environment with an already prosperous ally.
Reasons for Starting a Franchise Business:
Choosing an affordable franchise rather than starting your own company has numerous advantages. Here are some reasons why you should consider opening a franchise store:
You’re less at danger. Since you are entering an already developed business with a strong business plan, even your company is less likely to collapse. Less often, franchises fail less than other types of companies. You can benefit from the franchisor’s brand recognition, especially if you pick a well-established and well-known brand.
Continuous practice. The franchisor usually provides ongoing support on how to maintain up-to-date marketing procedures, legislation, and regulations in your selected sector and improve how you operate your company. The franchisor’s business success depends on yours, so they’re going to invest time and energy to make sure you know what you’re doing. They are interested in making your franchise business even more successful. You’re going to have a help scheme that you can immediately access and refer to at any time.
Financial advantages. If all of the franchisees use the same suppliers, the franchisor can often negotiate lower costs for the items you sell. That implies you can have a higher profit. You will also have access to advertising plans and other company’s facilities which, if you set up a small independent company, you would not otherwise have access to.
l You get to operate on your own–to some extent. You can’t alter the business model, but you can decide who you want to recruit and hire. Your franchise store must comply with the franchisor’s requirements. A franchisor may also dictate the opening hours of your shop and whether you need to wear uniforms. However, you can enjoy different degrees of freedom on other aspects of your franchise business.
You can reach the playing floor with little to no business knowledge. Being a franchisee implies that, while you are accountable for growing your company, you hand over the real job with all its risks and costs to the franchisor.
Benefits of Owning a Franchise Business:
Brand Recognition: Product strength is the first thing franchise companies offer to their franchisees. Everywhere in the world, franchisors from all industries have achieved great results with this business strategy. Mega-brands like McDonald’s and Starbucks have a substantial impact on the franchise industry and every day attract a host of clients. If they want a burger, they will want to go to McDonald’s rather than an anonymous, fast-food chain. Therefore, it requires time for individuals to understand what products or services you are providing without a recognized brand.
Professional Experience: Running a private business requires strong nerves, especially right at the beginning. However, the franchisor’s experience and tested business model can save you a lot of trouble. When you open a franchise business, you will receive superior resources from the franchisor, including advanced training, efficient processes, and know-how. All of this will help you to improve your inventory selection and grow your franchise business. Take, for instance, XIMIVOGUE, a fast-fashion franchised department store that has senior managers to assist all its franchisees.
Buying Power: Your franchise store will profit from the franchisor’s purchasing authority since they will be able to purchase in bulk and transfer money directly to their franchisees. Inventory and equipment are going to cost less than if you were operating an independent business.
Star Power: Many well-known brands are recognized domestically and internationally for their brand name. Owing to a franchise store of a famous brand is like buying a company and all its clients.
Continuous Support: Franchisees need assistance throughout the operating cycle, and the franchisor’s employees can provide support in all aspects of running a franchise business. The franchisor will also provide continuous R&D to give the franchisees new products and services. For example, the XIMIVOGUE’s franchise system provides various operating and selling support once the franchisee starts his new franchise business. At any moment, their customer service team will email the franchisees as soon as they have any after-sale issues. Good franchise system must have a full supply chain management scheme with tailored manufacturing. In that way, they can control all the costs through their unified batch procurement system.
l Economies of Scale: By entering a franchise network, every franchisee generally receives the chance to take advantage of economies of scale in the production, marketing, technological growth, and other significant business processes for the products they sell. An owner of a non-franchised company will not have the chance to obtain the same price and profit ratio as when entering a franchise network. For example, XIMIVOGUE’s products create excellent sales revenue, and with them, you can rest assured you will enjoy an excellent economy of scale.
Simpler Funding. It is quite common for any entrepreneur to have difficulties in attracting new capital to start a company. You can pull money from banks or shareholders, but you can not be sure that it will work well. You still need to consider the strict requirements and all the possible risks. That is why finding new business is a huge challenge for new owners of non-franchised businesses. These dangers are mitigated when you pick some of the best franchise companies in the market. With a franchise business, you can rely on the potential of your franchisor’s brand, which is often enough to persuade both banks and shareholders.