Very few people have the natural ability or expertise to be efficient at all aspects of running a successful business. That is where the franchisor’s experience comes into play.
Franchise organizations offer a structure for launching, operating and growing a business. Indeed, the successful franchisor will deliver the entire framework around which the business is built. Franchisors usually create comprehensive operations manuals and training programs for their franchise owners that cover marketing, operations, accounting, technology and other areas that are specific to the particular business model. These efficiencies are designed to enable franchise owners to earn more and spend less time and effort than otherwise would be required to open and operate a similar business on their own.
The franchise organization model offers the franchisee the ability to grow under a common brand and share in the benefits of a larger group of business owners. Though each business is independently owned and managed, all franchisees share in the collaborative benefits of the organization through the support and oversight of the franchisor including:
- Group advertising resources not typically available to small, independent business owners
- Owning your own business and making day-to-day decisions yourself, guided by the experience of a successful business enterprise
- The ability to sell products and services to markets that company-owned outlets have difficulty serving because of higher operational costs and lower motivation of employees in company-owned outlets
- The benefit of recognized and proven service marks, trademarks, proprietary information, patents and/or designs
- Training from successful business operators
- A lower risk of failure and/or loss of investments than if you were to start your own business from scratch
- Being a part of a uniform operation, which means all franchises will share the same interior and exterior physical appearance, the same product, the same service and product quality and overall customer brand awareness
- Operational support from the franchisor, both before and after launching your business venture, in areas such as financing, accounting, employee training and operational procedures
- An opportunity to enhance your management abilities within an established business model that you couldn’t experience in most employment situations
From the franchisor’s perspective, this collaboration:
- Offers the franchisor a method of rapid expansion
- Spreads the brand messaging and awareness over a large network of franchise owners
- Taps in to the franchise owner community’s “pride of ownership”
- Allows the franchise owner community to grow due to a duplicable system and support
- Features increased buying power for goods and services due to higher volume with suppliers
- Enables new products and services to be developed in the field with more testing and input
- Provides a steady cash flow to the franchisor to facilitate overall growth of the system
- Can fund the brand recognition effort to grow nationally and globally
Franchising offers a better chance to succeed
The U.S. Department of Commerce and other authors of statistics concerning franchising have shown that the revenue from franchise establishments accounts for over one-third of all U.S. retail sales.
According to studies on the economic impact of franchises, franchise businesses produce over 3 percent of nonfarm private output in the United States, and when the total contribution of franchise businesses was considered (which includes the goods and services used or purchased by franchise businesses and their employees), franchise businesses account for approximately 9 percent of nonfarm private output in the United States.
Government research over the years has indicated that the success rate for franchise-owned endeavors is significantly better than the rate for non-franchise-owned small businesses. In short, the good news is that franchising makes up a significant part of the national economy and presents a statistically better chance for success than other business options.
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