Starting a business from scratch could be hard!
It is reported that only 25% of new startups make it to 15 years or more, while 20% of them fail during the first two years, 45% within five, then 65% during the first 10 years before eventually folding up.
Fortunately, you can still be a successful entrepreneur under the canopy of another bigger enterprise that has stood the test of time and still proved sustainable.
What Is A Franchise In Simple Terms?
It’s an accredited subsidiary of a bigger firm, that has the right to sell products or services of the parent firm. In return, the franchisee pays an upfront franchise fee, then a subsequent monthly royalty fee based on a pre-agreed percentage of revenue.
These two partners are called the Franchisee and the Franchiser– gives her product/services, branding, marks, system, etc.
How Easy Is Franchising?
The franchise business model can be mastered by anybody, the success rate is also on the high side. Given this, it is easy to start a franchise, at least, it is easier than starting own company from scratch, for these reasons below.
Major Marketing Needs Are Already Taken Care of
As startups reportedly budget as much as 3% of total capital on only pre-launch marketing, just for kick-off advertisement.
With a franchise, this initial cost is offset, as one benefit of a franchise model of entrepreneurship. All you need to keep doing is pay an agreed percentage of royalties each month, as the parent company takes care of other things, allowing you to focus on what matters; growth.
Growth and increase in customer base; dominating the locality has to be the main focus of a potentially successful franchisee.
Higher Success Rate
Unlike starting a traditional business that has no guarantees for success with nowhere to fall back on, a franchisee enjoys the benefit of leveraging practically everything the franchiser banks on.
Starting from marketing, viable system, branding, integrity, their name, fame, etc., with almost everything already taken care of, an entrepreneur managing a franchise is just like a manager of a branch of the parent company. The opportunity gives a guarantee for success to an extent.
It’s Not Your Risk
You may want to toll the franchise path to reduce lots of responsibilities that come with starting up a company. The risk is born entirely by the owner, while owning a franchise allows for sharing risk between two parties.
While a franchise owner has their own risk to take, a major part of the risk involved in a business is the parent company’s problem to bother about.
Provided you don’t mismanage funds or under manage your arm of the establishment, the franchiser is responsible for the smooth running of the organization.
Having known what a franchise model is like, how easy or hard it can be, the success rate and risk involved, it will be just as important to know how to succeed in franchising.
Consider having a written plan to determine the running of your new venture, for at least, the next 5 to 10 years. Franchising lets you exercise your full entrepreneurial skills, which is why some franchises are more successful than others.
A plan will allow you to see into the future of the franchise even before it is started. This is crucial to let you have a sneak peek of possible challenges, including the risks involved. A written plan will serve as a financial plan too, to help you make the most use of your startup capital investment for maximum profit.
Marketing is Key
Though you have less to worry about adverts, there’s still a need to advertise your franchise to your locality. Social Media can easily create the necessary awareness without any overhead costs. Later, you can consider putting some money into newspaper ads, television, and billboards.
Marketing through different mediums lets you test the grounds on what works based on Returns On Investment, impact on sales, and general market exposure.
When you know your market, make realistic plans, franchising will not only be easy to buy and run but also profitable. Instead of planning on how to start your own business for months, year after year, easily leverage already-made thriving model through franchising to get your feet dipped for the first time.
The experience will worth your while.