Many startups have succeeded over the years to become big companies. But even more of them have failed for many reasons including cutthroat competition and lack of customers. However, franchises address many of the reasons behind the failure of startups. Here are five reasons to invest in a franchise.
1. Brand Recognition
The franchisor licenses to you their franchise, which includes the brand. Since consumers already know about the brand, there will be no need for brand awareness. You will only need to inform the market of your presence and location, and there will be instant foot traffic to your premises. The main reason for this is that franchisors invest a considerable amount of money in promoting their brands to the market.
2. Proven System
In a mature, managed, and well-designed franchise system, there will be a proven system to offer you the franchise’s experience. You will receive the required expertise to run the business according to the standards of the franchisor’s brand. But not all franchisors have an experienced management team, a proven system and concept, and the capacity to offer you the support and training you would anticipate from a proven system.
3. Continuous Support
Franchisors regularly offer initial and continuous training and support to franchisees. This support includes development assistance, site selection, and more. Franchisors have an experienced professional team to assist you in starting the business and supporting you through your operations. Emerging franchisors may only have a team of one person who is the founder. This is also okay because they will be more focused on ensuring your success since they depend on it to grow the franchise system.
4. High Success Rate
Investing in a franchise has a higher rate of success than starting a new business. Many of the factors that make this possible are highlighted above. The brand has grown over many decades, and everyone knows about it.
5. Higher Exit Value
Keep in mind that the only claim you have on the equity of your franchisor is for the value added to your business during the period of the agreement. When you leave the franchise business, either by termination or early retirement, most of the goodwill value of the business will be left behind. But during the contract period, if you can transfer the business to a new buyer for another full term, you will have a higher exit value than that of a similar independent business. The difference can be considerably significant, making your exit value high.
If you do not want the headache of having to look for customers and marketing your brand, a franchise is the best option for you. You will get ongoing support, a proven concept, higher exit value, and more.