There are 9 reasons why you should consider franchise opportunities
If you’ve always dreamed of being your own boss and owning a business but are intimidated by the amount of work that goes into starting one from scratch, you should seriously consider taking advantage of franchise opportunities.
High Success Rate
The odds aren’t good for new businesses. Approximately 80% of all new businesses fail within the first 18 months. Franchises are the exception. While there are several different factors that influence the success rate of a franchise location, studies show that a brand-new franchise location is significantly more successful than a newly started business. Approximately 30% of all franchise owners report making over $150,000 annually.
Carefully researching different franchising opportunities is the key to making your involvement with a franchise a success. When looking at your options, pay particular attention to:
- The franchise’s business model
- Overall scale
- Overall scope
- Unit growth
- Average sales-per-unit
Franchises are Growing
The future looks bright for franchises. Data collected by HIS Market Economics indicts that the projected sector growth is 3.9%-5.1%. Between the years of 2013 and 2016, 680,000 Americans were employed by a franchise.
While the future looks bright for franchises, you do need to proceed with caution. Only consider franchises that have a record of success, a history that indicates they’re able to adapt to change, and is in a state of growth.
Franchises Make the Most Out of Technology
For the most part, franchises do a great job of using technology to improve their business strategy and marketing efforts. Successful franchise organizations are masters at knowing how to use tools such as the internet to increase their revenue stream.
The tools most franchises use to promote their brand include:
- Search engine optimization (SEO)
- Social media marketing
- Digital marketing
- Franchise directories
Most franchises have the tools and resources needed to really connect with the members of the target market. The money the franchise pours into their national and state campaigns is money you don’t have to spend promoting your location.
Most franchise owners find that the only real marketing they have to do is local marketing, which is often done with:
- Hosting radio events
- Sponsoring local youth events
- Purchasing livestock at the county fair
- Print advertisements
In addition to using technology to promote the franchise, franchise organizations will also turn to technology to aid with both monitoring franchise locations and to help improve the working conditions. In the past, franchises were often the first businesses to use different point-of-sale devices, create mobile ordering apps, and update to new computer systems.
You Get to Pick How Involved you are
There are two different types of franchise owners. First, there’s the franchise owner that purchases a location and hires someone to manage it for them. Second, is the franchise owner who manages the location themselves and takes on a hands-on approach to running the franchise location. While both systems can work, most find that the active ownership generates the highest returns. The great thing is that even if you do act as the location’s manager, you still have the luxury of setting your own hours.
Some Franchises Provide Financial Support
One of the things to consider when you’re looking at various franchise opportunities is that many of the larger, well-established franchises provide financial support to investors. Not only does this save you the hassle of spending several hours going to various banks and trying to procure funding, but it also indicates that the franchise organization truly believes in what they’re doing and is willing to support owners. A franchise that provides financial support will do everything in their power to make sure each new location is a success.
SBA’s Love Franchises
If the franchise opportunity you’ve fallen in love with doesn’t provide financing, or if you require additional financing, you’ll want to qualify for an SBA loan. These loans are great because there aren’t any balloon payments nor are you penalized for pre-payment. While there are some businesses that have a difficult time qualifying for SBA loans, franchises aren’t one of those. Since franchises are so successful, the lender dealing with the SBA loan is highly likely to approve your application and give you a fair interest rate.
Lenders dealing with SBA loans are so fond of franchise opportunities that there’s even a Franchise Registry which contains a list of preapproved franchises. If the franchise you’re interested in investing in is on the list, you’ll enjoy a streamlined loan application process as well as an even better chance of approval.
Franchise Opportunities with Low ROI Exist
Each franchise opportunity is different which means the length of time it takes to get a full ROI varies from one franchise opportunity to another. However, if you look around, you can find franchise opportunities that have a small franchise fee and don’t require a great deal of additional expenses to get started. Examples of these are at home franchises and mobile franchises. While these don’t always generate the massive profits you’d expect from a well-established fast food or retail franchise, most owners quickly see a complete return on their investment and generate a respectable profit which they often chose to invest in more franchise opportunities.
A Pre-Established Target Market
One of the biggest reasons so many new businesses fail is that the owners are unable to successfully identify and attract the target market. By the time you buy into a franchise opportunity, this difficult task has already been handled. Not only has the franchise established a brand image that’s attractive to the target market, but the consumers in your area are clamoring for the franchise to come to your home town and will show up in droves on the day you open.
This successful grand opening does wonders to boost your confidence and make you even more excited about the franchise opportunity. Not having to worry about finding and marketing to your target market allows you to focus on your new location and direct all your energy towards making the best possible franchise location.
Franchises Usually Survive Recessions
The economy is in a constant state of flux. There are times when business is booming and there are times when people are staying home and holding on tightly to their money. During the recession periods, many small businesses fail. Franchises are different. While a location will often experience a drop in business, the franchise’s name recognition is often enough to keep people coming, which means the business continues to meet expenses and often continues to generate a profit.
When you do your homework and find a franchise opportunity that excites you, you’ll enjoy reaping all the benefits the franchise sends your way.