Since 2013, the number of franchise businesses has been on an increase, rising from 697,000 to over 785,000 in 2020. A gradual increase, but an increase nonetheless.
Why are more and more people buying into the franchise business model instead of starting entirely new businesses from scratch? There has to be a solid reason, right?
Starting a franchise business has a number of benefits. In this article, we’re exploring why it’s advantageous to start a franchise.
- Proven Product/Service
This, by far, is the biggest advantage of starting a franchise business.
Let’s say you want to start a coffee shop. You could craft your own recipe and build a business around it, or you could sell a well-loved recipe from an established global brand, such as Starbucks.
Where do you see yourself succeeding?
It’s possible to build a new coffee brand and find wild success, but that’s not a certainty. In fact, considering many new businesses fail, the odds are against you.
But why take all that risk when you can become a Starbucks franchisee and sell what’s already a proven product in the market? Because you’ll be selling a proven product or service, your chances of finding success are much higher.
- Easier Access to Capital Financing
Raising startup capital is one of the biggest obstacles entrepreneurs like you face.
You could try to get a business loan, but traditional banks have a reputation for not lending to small businesses and entrepreneurs who are looking to start businesses.
You don’t have to be a loan officer to see why banks have low lending rates to small entrepreneurs. Most new businesses fail and banks know it. They don’t want to risk losing their money lending to entrepreneurs who’re destined to fail.
If you’re looking to start a franchise, though, you will have an easier path to securing the financing you need. Banks and other lenders know franchises have higher success rates, making them more likely to lend to entrepreneurs who’re looking to buy a franchise.
- Expert Support
When you start a business, you’re on your own. You have to figure out how to make everything work by yourself.
When it comes to franchising, that’s not the case. You’ll have unapparelled support from the franchiser (the organization that sells the franchise). Most franchisers have entire departments dedicated to helping new franchisees get off the ground.
Even if you resolve to hire a marketing agency to help you get franchise leads, you’ll still have access to sales and marketing support from the franchiser. With access to expert support, you’re more likely to avoid mistakes that can lead to business failure.
The Franchise Business Model Gives You a Better Shot at Success
The franchise business model has its fair share of disadvantages, but for the most part, it’s far better than starting a new business from scratch. As we’ve demonstrated, you stand to enjoy a number of significant benefits.
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