A question new investors often ask at the start of their business-owning journey—should I open an independent business or a franchise business? As an investor, only you can answer that question. There are advantages of franchising versus independent business ownership to consider.
In this article, we will explore why franchising is beneficial, list some of the pros (and cons) of a franchise, and discuss the key benefits of franchising to give a better understanding of the franchise ownership process. Perhaps after reading, it’ll be easier to decide if franchising is right for you.
First, let’s consider 5 pros of franchising.
5 Advantages of Franchising: A List
#1 Tested Business Model
No matter the franchise brand you choose, you can be assured of one thing: their business model has been tested. Sure, some brands have more of a track record than others. It’s up to the individual to decide the importance of that.
Some people may prefer to sign with a legacy brand, which by definition has more than 25 years in business. That’s a truly tested business model.
Other investors might like the challenge of joining a promising brand from the start and growing with it as it becomes a household name. They buy in when the investment price is likely at its lowest and enjoy returns on their investment as the brand grows, either through a spreading reputation or multi-unit ownership.
However, brands don’t typically offer franchise agreements without a period of successful business ownership under their belts in the first place. Many brands even have multiple locations before considering offering franchising agreements, so they have multi-layered experience bringing new venues into reality.
#2 Experienced Leadership
Another advantage of franchising is the experience levels of the leadership team behind the franchise brand’s expansion and development. These individuals know how to grow brands and their locations, and their goals align with franchise owners’ goals.
Franchise leadership teams are great people to have in your corner as you bring your new franchise investment to life. During the pre-launch phase, they help you avoid the pain points they’ve learned through opening previous locales for a smoother grand opening. You can even save money during the start-up process!
Having someone by your side who’s gone through the process before is a remarkable advantage of franchising.
#3 Comprehensive Training Programs
Joining a franchise takes the guesswork out of operating your business, but you’ll still have to learn those procedures. Luckily, franchises provide comprehensive training, which is another advantage of franchising.
Not only will you learn the history of your franchise brand and the people who made it what it is, but you’ll be taught everything you need to know about running your franchise location smoothly and efficiently.
#4 Brand Recognition and a Built-In Customer Base
Another of our advantages of franchising is brand recognition. Let’s consider the home improvement industry as an example.
A customer seeks to renovate their garage because it’s cluttered, doesn’t serve their needs, and is a huge, potentially untapped usable space. They’re going to seek out a garage renovation franchise they can trust. Their home, after all, is their biggest asset. They won’t trust it to just anyone, especially not a brand they’ve never heard of or one with poor customer reviews.
The garage transformation franchise people recognize with a loyal customer base that leaves positive reviews is the brand that will win new business.
Which is smarter—investing in that franchise or trying to open a new garage renovation company to compete with them?
#5 Spreading Out the Risk
The last advantage of franchising we’ll talk about is spreading out the risk.
Going the franchise route is less risky for investors because you already know a few things:
- The business concept is good, or the business model wouldn’t have succeeded previously.
- The brand is recognizable to existing customers, and there’s a market in place.
- The executive leadership team is doing work alongside you, so you’re not alone.
As for the leadership, they’re not spreading themselves so thin trying to run new locations they don’t have the bandwidth to oversee. They have skin in the same game as investors—wanting to see the brand thrive—and they trust the franchise owners to do their work as fully-trained owner/operators.
The risk is spread out, and everybody benefits.
Balancing the Benefits and Drawbacks: Advantages of Franchising Versus the Disadvantages?
Like any investment, there are also potential disadvantages to franchising to consider. While the franchise model offers numerous advantages, it is essential to acknowledge and understand the associated challenges and downsides. Potential franchisees can better mitigate risk and have a balanced approach to their investment journey.
Franchise Business Structure
One common aspect of franchising is the revenue distribution structure. For example, franchise owners must share a percentage of the profits with the franchise brand. This is a natural part of the business structure that encompasses franchising.
Branding Franchise Boundaries
Additionally, franchise owners have to adhere to the brand’s marketing messaging. Typically, there are set guidelines and messaging that every franchisee must follow, including the operations of the facility. However, many franchise owners appreciate the brand handling marketing strategies for them.
Cost Structure of Franchising
There are fees included in the franchise agreement. These can vary and will often pay for things like technology tools and marketing strategies. Of course, no one likes paying fees, but they enhance the brand’s ability to grow and build its image to reach more potential investors and customers. These upfront fees navigate the cost of business operations to benefit the franchisee so they can easily manage expectations of expenses regularly.
Independent Business Benefits vs Franchise Business Benefits
It’s true that in an independent business, the owner calls all the shots, but that can also be a burden. All the risk rests on your shoulders. You’re in business alone.
The trick with franchising is to find a franchise brand that matches your business mindset. Take Garage Living for example, where the products are North American-made and the services are guaranteed. Such a brand is one many investors are proud to join and align their futures.
There you have it! Advantages and disadvantages of franchising in a quick and handy list alongside some key benefits to help you determine if franchising is the path forward for your business investing future.
Want to learn more about the advantages of franchising with Garage Living? Contact us to find out how you can become the next Garage Living franchise owner with your own large, protected territory!