4 Reasons Why Franchises are a Great Startup Option
Entrepreneurship presents opportunities for great reward and personal satisfaction. While not everybody dreams of being their boss – and even fewer have the necessary skills – thousands of people embark upon such dreams every single day. Success or the lack thereof is often determined by a variety of factors, making the process of going it alone both risky and worrisome.
Nevertheless, different business models present different levels of risk and reward. For entrepreneurs with access to capital, choosing to embrace a franchise rather than a completely new business idea may make the most sense.
Today, we’ll look at four reasons why franchises are a great startup option for first-time entrepreneurs.
1. Freedom with Guidance
Any business owner appreciates the ability to act as he or she sees fit but also understands the value of having proactive assistance and guidance. Franchises come with many benefits, but the fact that the entire business model is already structured and available to entrepreneurs makes operating the business a more successful endeavor.
In addition, franchises come with a variety of protections and easy-to-understand processes for handling financial and legal matters. As noted by Larkin Hoffman Franchisor Attorney, franchise laws exist that help govern day-to-day business operations, sales, and other related matters. With a franchise, you can count on consistent guidance while still enjoying the freedom of entrepreneurship.
2. Easier Access to Capital
Every business idea has its merits. However, the road to successful incorporation is a bumpy one and requires many hurdles to be overcome. Arguably one of the biggest is funding: given the general failure rate of businesses, you must absolutely wow lenders with your business plan to secure funding.
Franchises, however, utilize established and vetted business models. When joining forces with a company via a local franchise, all of the minutiae that are required to secure franchise funding will be handled for you. This all but ensures that you’ll be approved for any necessary funding if/once the business in question has approved you for a franchise.
3. Less Business Risk
With access to franchise tools, advice, and guidance, the inherent risks of your business failing are substantially less. While not full-proof, the failure rate of franchises tend to be lower than that of businesses started from the ground up. While the specific industry dramatically affects the rate of success, franchises tend to succeed anywhere from 10-30 percentage points more often than their go-it-alone alternatives. Because all of the biggest risks and potential failure scenarios are considered by the company in question pre-franchising, smart entrepreneurs can breathe more easily.
4. Better Scalability
Every successful business is bound to have growing pains; once a certain point is reached, it becomes more difficult to take the next step in terms of growth. While this can be true for franchises and non-franchise businesses alike, the former group has access to tools and resources that make scaling up much easier.
Once you’ve opened, managed and proven to be capable of running one franchise, opening a new location is often just a repeat performance. As the home office will be more than likely to approve your requests for growth and lenders will do the same for funding, growing beyond one location in some ways becomes easier with each ground-breaking ceremony.
While it requires considerable work and dedication, choosing to operate a franchise in lieu of a traditional business has multiple advantages. If this is your first time in the world of major entrepreneurship, then consider starting with this tried and true business option.