3 Reasons Owning A Franchise Is A Great Business Decision
Starting any business is never an easy endeavor. It requires time, effort, money, and sacrifice along with an emotional rollercoaster of events that will either lead to success or failure. According to the Small Business Administration, business owners have a 49% chance of being in business five years after starting a non franchised business. On the contrary, those who join a franchise are 90%, likely to be in business after five years and will either sign a renewal agreement or have an asset to sell or transfer to a new owner. Why the difference in numbers?
Here are just 3 reasons how a franchise can increase the probability of staying in business long-term:
To no surprise, systems are one of the largest factors in achieving success in business. Having non-existent or inefficient systems means more confusion, stress, and mess. Why recreate the wheel? Franchisors have already been down that path and in most cases, have a list of franchisees that you can speak with candidly about how the systems work in their business. As a franchisee, you can utilize these systems and start building a business faster than if you try and create the system on your own.
Let’s discuss roles. The franchisee's role is to build and operate a successful business using the systems provided by the franchisor. The role of the franchisor is to provide systems, training, support, technology updates, mentoring, and coaching. A franchisee should stop of nothing short of demanding all the above from the franchisor and that they go the extra mile. In a franchise system, both the franchisor and franchisee MUST work in harmony to achieve individual goals and overall brand goals. If the franchisees are not successful, the franchisor must look in the mirror and make sure the support is there before pointing the finger of responsibility. If you are looking at buying a franchise, make sure the franchisor has a solid plan in place for those first five years and beyond. After all, you are in business for yourself, but not by yourself.
As an independent, you own and operate the business completely on your own, which is okay if that’s your style. But by joining a franchise network, you will be surrounded by people who are on the same mission and path as you. Franchisees will have each other to lean on in times of question and in times of celebration. As an independent start-up, you may not have access to information with people who are actually using the same systems and/or it can cost you a lot more to buy the information from a 3rd party business or a consultant; whereas in the franchise network, franchisees will offer support or guidance to other franchisees in the system, at no charge. The support from the network of franchisees along with the franchisor, provide a secondary system that shares a common goal to get all involved in the 5-year success milestone and beyond.
Owning a franchise is not for everyone. You may be in the 49% that find long-term success by building your business from the ground up. However, it is clear franchised businesses are more likely to make it to the 5-year milestone and be valuable enough to continue reaping cashflow or to sell to another owner. Franchising is an amazing industry that gives franchisees access to systems that take resources far beyond what you pay in initial fees to develop and test and maintain. Any business, including purchasing a franchise, requires work, lots of work. It won’t be easy, yet it’s worth it!
If you are interested in learning how City2Shore Real Estate's model can bring you long-term success we'd love to hear from you. Visit our franchising website or contact me directly with the information provided below.
Ryan D Kelley
Chief Executive Officer