Starting your own business from scratch can be terrifying and exciting at the same time, but it also can be costly. On the other hand, franchises can be much more affordable ways to start your own business since franchisors have already done most of the legwork involved in getting their business up and running, so you won’t have to do everything yourself. So should you buy a franchise? If you’re wondering what’s involved and if it could be right for you, here are some factors to consider as you make your decision.
What is a franchise?
A franchise is a right to sell someone else’s products and receive profit. The company provides support like training, marketing, and advertising in exchange for a percentage of the profits. Franchises are popular because they are easier than starting your own business. However, there can be disadvantages. For example, if you open a franchise, you need to follow a strict system of rules, meaning you will have less control over your business. If you want to buy a business, you have complete control of. Then we recommend you search for businesses for sale, as franchises might not be your ideal business opportunity.
Advantages of owning a franchise business
Now that you know what a franchise is, we will list the advantages of owning a franchise business and where you can browse franchises. If you are interested in pursuing a franchise opportunity, we recommend you find these using an online directory of franchises for sale, such as Franchise UK. This way, you can browse franchises online and from the comfort of your own home through advanced search options, making your search for your ideal franchise much easier.
Low initial fee
Franchises can be an excellent way to go for those who need more funds or experience to start up their own business from scratch. The initial fee is lower than that of starting your own company, and you’re not going into debt. However, franchises also come with a lot of added costs that might affect your decision. You’ll need to put down an initial payment, which is typically around £10,000 to £100,000 and up. You’ll need to pay an ongoing royalty fee–usually between 5-10%–to the franchiser monthly. You’ll also have to pay for marketing materials, as well as regular inspections by the franchiser.
Franchises come with support and training.
Franchises offer great support to the new entrepreneur. You will receive training on how to run your business, and the franchisor will provide you with marketing materials, operational manuals, and other resources. A well-run franchisor will also monitor your progress and offer feedback along the way. It is important to note that only some franchises are created equal. Some are better positioned than others for success because they have more experience or better access to markets or resources.
Easier to access funding
Franchises are highly attractive to investors because they can offer the benefits of owning an established brand while minimizing the risks of a startup. Indeed, franchisors have significant advantages when it comes to accessing funding to grow their business. They typically have access to private equity and debt markets that might be closed off to smaller companies, and many lenders will only lend money if the borrower is part of a franchise system with a track record for success. In addition, franchisors often receive lower interest rates than other small businesses because banks are more confident in their ability to repay loans.
Low failure rates
Buying into a franchise is a great way to start your own business with the backing of an established brand. Franchise brands are also more likely to survive as they’re often better equipped with systems, marketing know-how, and professional support. In addition, franchising has low failure rates–typically less than 10%. This is because franchisors have already gone through the process of establishing their brand and creating an organizational structure that works. So if you want to lessen risk and ensure success for your new venture, buying into a franchise might be your best option.
Buying an established franchise can be a great way to enter the business world. Owning your own business is no easy feat, and certain risks come with it. However, buying an established franchise is an excellent way to build up your experience while benefiting from someone else’s success. Buying into an established brand also guarantees that you will have customers coming in from day one since the company has already done all the marketing for you. Plus, if something does happen and your store isn’t doing well, there’s always the opportunity to sell it off as a franchise resale and try again elsewhere.
Final thoughts on buying a franchise
Buying a franchise can be an exciting and rewarding experience, but it is not without risks. Franchises offer stability by ensuring that they will continue to operate similarly for many years. But before buying a franchise, it’s essential to consider all the ways to build a successful franchise business. In most cases, starting your own business will provide more control over the day-to-day operations but buying a franchise business usually leads to higher success rates than purchasing a business for sale.