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 More About Franchise

A business franchise is a packaged business model that guarantees you the use of an established company’s system and trademark for an established period in exchange for paying them a fee.

 The benefits of franchising are clear: franchisers spend years developing their company’s methods and honing their marketing strategies, so you don't have to. Franchisers also offer extensive training programs, which help make sure that you get off on the right foot. And invariably, there's plenty of opportunity to expand your business through franchising.

But before you sign up to be part of this fairly new phenomenon — there are certain things you need to know before taking the plunge into franchise ownership. A franchise is not for everyone. You will be tied to a particular company and their methods, which means that if you want to take a different approach or if you run into financial trouble, you may not be free to do what's best for your business.

The advantages and disadvantages of a business franchise are explored further in this article. Check out the information below to decide whether franchising is right for your business idea.

Business Franchise Advantage #1: Established Methods

The first and possibly most important advantage of a franchised business is the opportunity it gives you to become an instant expert in your field. You'll have instant credibility and recognition by using the established methods developed by your franchiser, who may have spent years honing their business plan. In other words, a franchise provides you with a ready-made business model that has been tried and tested, rather than forcing you to create your own from scratch.

Furthermore, in return for using the franchiser's methods and trademarked name, you pay a fee or royalty to them. This ongoing cost is generally very low compared to the significant start-up expenses you'd face if you were starting out on your own. Therefore, the franchising opportunity can be seen as an investment in your future business success.

Business Franchise Advantage #2: Established Name and Reputation

The second advantage of a business franchise is that you'll also have the benefit of an established brand name and reputation to help promote your business. Many franchisers will offer their systems for free if you agree to pay them a royalty on all sales made using your franchise. The important thing to remember here is that loyalty goes both ways; you'll be dependent on the franchiser for your success, so make sure that they're willing to support you in any way they can. You should get this assurance in writing before you sign up with them.

The franchiser will also have already proven the viability of their system, so when you take it on board you're likely to have a good idea of whether or not it will work, saving time and money in the long run.

Business Franchise Advantage #3: A Distinctive Brand Name

A common problem for business owners is that they struggle with finding and promoting their unique selling point – the unique benefit that makes a product or service stand out from all others. Learning how to promote your brand name effectively is one of the most important aspects of franchising. Your franchisee will be there to look after this side of things, ensuring that your chosen name is represented consistently in your marketing materials and advertising campaigns.

Business Franchise Advantage #4: Training and Support

One of the main attractions of a business franchise is the opportunity to get support and training. Franchisers often offer both in-person and internet training programs that show you how to get the best out of their system. Most will also provide you with an ongoing support system if you have any problems or queries.

This can prove invaluable when it comes to getting the hang of your new franchiser's way. Of course, this kind of help should be included in the initial terms and conditions for your agreement; otherwise, you may find that it has disappeared after your company becomes successful – leaving your company's reputation in tatters. Read more about Business Franchise Support .

Business Franchise Advantage #5: Cost Savings

Another advantage of a business franchise is that you can make substantial savings in your business costs, as you have to spend less on training, advertising and marketing. This is because the franchiser has already taken care of all these issues for you. You'll save time and money on things like developing your logo and company name, which gives you a head start when positioning yourself in the market.

Business Franchise Disadvantage #1: The Cost of Purchase

One potential disadvantage of a franchise is that you'll have to pay the franchiser a price for using their system. This can work out to be expensive, as you'll not only need to buy into their trademarked name and set methods but also pay a royalty on all sales made as part of their system. In addition, you'll need to renew your agreement with your franchisee after a period of time. If anything changes in your company, for example if you want to start offering extra services or products, you may have to renegotiate the terms with the franchiser before updating your agreement and re-launching your business.

Business Franchise Disadvantage #2: The Long-term Commitment

Another disadvantage of a business franchise is that you have to be prepared to commit to the long-term success of your business. The terms and conditions are generally quite strict, so it's important that you read them carefully and make sure the franchiser is reliable. One thing you should look for when thinking about signing a franchise agreement is their return policy, which provides an obligation on the franchiser to provide you with support and assistance to help close any sales/revenue gaps over the term of your agreement (that's usually between five and seven years).

Business Franchise Disadvantage #3: The High Initial Investment

The final business franchise disadvantage is the high initial investment you'll need to make when starting out. The initial costs for a successful franchise can range from several hundred thousand pounds to millions depending on your chosen field and the type of franchise you want to run. However, even if you don't possess that kind of capital, there are still options available to you. Agreed equity funding is a way for people with a good business idea, but no capital behind them, to get up and running quickly, often drawing on their business idea as collateral against their investment.

Conclusion: What are the benefits of a business franchise?

Franchising has a lot to offer business owners. Not only does it give you the opportunity to build up a brand identity, but it also brings with it the support and expertise of people with expertise in that area. In addition, franchisers have already demonstrated their ability to successfully run franchises and have proven their success by building them into large companies such as Burger King and McDonald's. So if you're ready for your dream business idea to become a reality, becoming a franchisee is definitely worth considering.