There is a lot of difference in starting a new business and starting a franchise. Starting a new business needs a lot of time, thinking and investment while there is no guarantee that your business is going to give you profit. Also a new business is like starting from scratch to build something sustainable and profitable in which you need to invest time and money in explaining the potential customers about your business and making them believe in your product. But contrary to that starting a franchise is like starting a business but only now you don’t have to invest money in attracting your customers that means much less investment in advertising as well as a greater probability of making good turnover. Some franchise organizations which provide you with a well established name in market in addition of giving a confidence of making good turnover because of the support system from the start.
So what are the advantages of starting a franchise over starting a new business?
- It is well established that franchises have a higher rate of success than a new business. Because of having a benefit of already established business starting a franchise is easier and less expensive. The franchise organization already is a brand that’s established and it has its own customers. The franchisor does all the advertising which gives you benefit without investing money in advertisement while a new business would definitely need to build itself a brand. Franchisors have an established reputation, proven business model, bigger advertisement platform and work management which adds as an asset to the franchise ownership.
- Finance is required for both starting a franchise and start-up business but in case of financing also the franchise opening has an upper hand. Everyone would find it safer to invest in a well established brand which has more success rate. Also starting a new business costs a fortune and it is risky to invest in new business because most of new businesses are likely to fail more than a franchise ownership. While for a start-up the lenders will not approve loans, some franchise organizations provide a third-party financing option which can loosen some weight off your shoulders.
- Starting a new business means you need to create an effective business plan and if you do not have much education or experience in business then it’s more likely that your new business plan will flop. The same is not necessary for a franchise ownership because the experience and education for business is not required in this case as the franchisors already have their own business model to operate. Also many franchisors provide extensive training and training courses to make sure of your effectiveness of running a franchise.
- There are certain problems which every start-up faces. One of them is going through a detailed study of the outcome with the trials you put in your business and this not always results in benefit. Such errors sustained by the business in its starting time can lead to the failure or financial sinking. But there is no such risk in franchise ownership. The franchisors have it all figured out and you just have to follow the criterion.
So you can taste success in franchise ownership rather than risking your new business idea and running it into dirt. And from above it is proved that there definitely advantages to go down the route of franchise ownership before starting a new business. Many franchisors are out there now which can help you establish a new business on already proven constraints which result in success financially as well as knowledgeably like you can start a Dickeys barbecue franchise, a successful business, rather than going into all the mess of starting a new business. Once you are financially successful and have gained experience in business, you can always look onto your great idea for your own business.
Own a franchise, earn money, rest. It sounds easy but not that easy. While starting a franchise is easy and financially secure than a start-up, there are some mistakes people do while starting a franchise. Here is a list of some common mistakes which one need to know and need to avoid while buying a franchise:
- Drifting off the franchise system: Do not deviate from the franchise business plan. The customer should feel just the same as any other franchise of the brand. The system provided by your franchisors is the best for your business and solution to the entire problems the business can have and if you do not follow the system then it may have adverse effects on your business.
- Not researching many franchises: Walking into a field and buying it works in real estate investing but if you are buying a franchise then investigate about as much as you can and then choose the one you want. Investment made into a wrong brand can sink your business into nothingness leaving behind a big pile of loan to pay. So research first and then buy the franchise.
- Not getting a lawyer when buying the franchise ownership: Buying a franchise is complicated because of the legal work involved and recent study show that it takes at least 20 years of study to understand the franchise disclosure document so get an experienced lawyer who can do this work for you and save you from going into a bad agreement.
- Not understanding the importance of training: Most of the businesses fail due to lack of management. Training provided by the franchisors helps you in understanding their working, their product and market etc. You need to do extra work after training to improve your management skills. So now you know the training is important.
- Overinvestment: Over investment without proper budget plan could result in downfall of business. Decide how much time you have and how much money you have then create a basic, true, and practical budget plan. A good, balanced and rational budget plan can keep your business on track.