There is a lot of difference between 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 will give you profit. Also, a new business is like starting from scratch to build something sustainable and profitable. You need to invest time and money to explain to potential customers about your business and make them believe in your product. But contrary to that, starting a franchise is like starting a business. Still, only now do youn’t have to invest money in attracting your customers, which means much less investment in advertising and a greater probability of making a good turnover. Some franchise organizations provide you with a well-established name in the market and give 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 franchisees have a higher success rate than a new business becautheyg a beef from an 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 an 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 to the franchise owner.
- Finance is required for both starting a franchise and start-up business, but in the case of financing, the franchise opening has the upper hand. Everyone would find it safer to invest in a well-established brand that has more success rate. Also, starting new business costs a fortune, and it is risky to invest in new business because most new businesses are likely to fail more than franchise owners. While for a start-up, the lenders will not approve loans, some franchise organizations provide a third-party financing option that 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 franchise ownership because experience and business education are not required, as the franchisors already have their own business model to operate. Many franchisors also provide extensive training and training courses to ensure your effectiveness in running a franchise.
- There are certain problems that every start-up faces. One of them is going through a detailed study of the outcome with the trials you put in your business, which does not always benefit you. Such errors sustained by the business in its starting time can lead to failure or financial sinking. But there is no such risk in franchise ownership. The franchisors have it all figured out, and you have to follow the criterion.
So you can taste success in franchise ownership rather than risking your new business idea and running it into the 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 Dickey’s 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 into 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, people make some mistakes 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. The investment made into a wrong brand can sink your business into nothingness, leaving behind a big pile of loans 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 a recent study shows 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 businesses fail due to a lack of management. The franchisors’ training helps you understand their working, their product, and market, etc. It would help if you did extra work after training to improve your management skills. So now you know the training is important.
- Overinvestment: Over investment without a proper budget plan could result in the downfall of the business. Decide how much time you have and how much money you have, creating a basic, true, and practical budget plan. A good, balanced and rational budget plan can keep your business on track.