Considering a Franchise or Independent Small Business?
One way of becoming a business owner is to acquire a turn-key business like a franchise. Franchise businesses are easy to acquire, provide a seemingly higher probability of success and practically pop out of the box with a preassembled system. While the success rate of franchise businesses after five years is widely reported to be high, there really is no credible studies to confirm the number. That being said, franchises do provide advantages over going it alone. And it seems that there is a franchise for just about every industry you can name.
Research does show that the larger the business, the better the survival rate regardless whether it’s a franchise or an independent business. When it comes to franchise success, you need to look no further that McDonald’s. There are approximately 37,000 company owned and franchised locations worldwide doing over $50 billion in revenue.
Some of the reasons to choose a franchise are:
- Track Record of Success
- Instant Brand Recognition
- Training and Ongoing Support
- Proven Business Systems
- Established Marketing Strategies
- Lower Risk
Now, let’s address a few more things in a little more depth including:
- Business Format Franchise
- The Franchise Prototype
- Franchise Prototype Standards
Business Format Franchise
The most common form of franchising is the Business Format Franchise. The business format franchise developed from an earlier model call the “trade name” franchise. The big change between the two was in the form of rights. During the “trade name” days the franchise owner only had marketing right’s, now franchise owners have rights to the entire business including the business format, operating systems and trademarks. This has allowed for a shift in focus from quality and name recognition of the products to business methods like the sales techniques that drive business success.
The Franchise Prototype
The advent of the Franchise Prototype allowed for further changes to be made. Today’s franchisees can really stand out because of the techniques and processes that they have developed rather than only using those of the franchisor. This can make a significant difference in the success of the franchise as the owner can custom tailor their marketing and promotions to the direct needs of their local target customers. The business can also establish and document their own systems so that tasks are performed consistently and customers will have predictable experiences.
Franchise Prototype Standards
Now, the above being said, no one in their right mind would purchase a franchise if the parent company didn’t have certain systems and a solid plan of action set up to improve the probability of success of the business. So, most franchisors have developed a few standards that should be put into place to help jump start the process of opening a successful franchise.
The franchisor needs to build a business model that addresses prospective customers or clients, suppliers and employees so that it can consistently offer high quality work. The business should build and provide:
- A user-friendly model that can be used by individuals of any skill set.
- A defect-free model.
- A model with Operations Manuals.
- A model that will provide guaranteed, consistent results.
- A model that encompasses the same branding in color, dress and facilities codes.
These are all ways the franchisor makes sure their brand stays the same and in the front of the minds of customers. When you are purchasing franchise with a widely-known brand name, you will attract customers just for being you.
However, for your business to be successful, whether a franchise business or independent, it’s important that you are prepared to work hard and are willing to persist. Business success does not just happen because you want it. You must be willing to put in the effort. And when things don’t go as planned, you must have the ability to continue in the face of challenges or even failures.
“There is no substitute for hard work.”
– Thomas Edison
“Persistence is the price of success.”
– David DeAngelo
If you are considering purchasing a franchise or already are operating one, why not contact us to discuss your options and challenges while taking a FREE test drive of our E-learning system?
Kinetic Business Strategies helps overworked business owners systematically transform their business so they can more effectively grow revenue, improve cash flow & profits, increase the business’s value and achieve a better work / life balance.