Starting your own business can be an intimidating and expensive endeavor. Some may think the only way to start a business is by spending an enormous amount of money on inventory, building out a physical store, and hiring lots of employees. While those are all great ideas, they may not be feasible for everyone’s budget. Enter: franchises!
A franchise business opportunity allows you to purchase a license to open a business using an established company name with an established line of products and services and an operating system in place.
While you do have to buy a franchise, the cost doesn’t have to be very high. If you are looking for a business opportunity that has some risk but also offers a lot of potential rewards, buying a franchise maybe right for you!
Many entrepreneurs find franchises to be an easier way to start their own businesses, and there are three main types out there for would-be business owners to choose from:
Benefits of owning a franchise business
- You have a proven system
- Helps you avoid the slump of having to start from scratch
- You own the entire business
- Access to people who have the knowledge needed to run the business
- Reduced risk of business closure
- Reduced stress
- Ongoing mentorship
- Supportive business relationships
The 3 Types Of Franchise Systems
What They Are: A retail franchise is a business that sells something to the public. With this type of franchise business opportunity, you purchase the right to open a store with an established name and to purchase merchandise from the franchisor’s suppliers. Products are purchased at low wholesale prices and then sold at a higher retail price to make a profit. There are many types of retail franchises, including clothing stores, furniture stores and specialty stores.
Benefits: To be successful with a retail franchise business opportunity, you don’t need to have experience in a particular field or trade. You simply need to become acquainted with the specific products that the franchise sells. While there are significant costs associated with retail franchises, you don’t need to purchase a lot of equipment to get one off the ground. There is also a potential to do very high sales volumes.
Drawbacks: With a retail franchise, you’ll pay a significant amount for your franchising agreement. You will also need a lot of employees to work in your store and will likely need to be prepared to work nights and weekends.
What They Are: A service franchise is a business that provides a service for customers rather than selling them a product. With this type of franchise business opportunity, you pay to offer some type of skilled labor or professional service under a well-known company name with an established reputation. Examples include landscaping franchises, accounting franchises, pest control franchises, and plumbing franchises.
Benefits: Service franchises are typically the least expensive type of franchise business opportunity, and it’s usually possible to start one with a limited number of employees. Most service franchises provide services that are always in demand, ensuring a steady stream of customers. With most service franchises, it’s possible to have more flexible hours; however, it may be necessary to be on call for emergency service.
Drawbacks: You typically need to already have a skill and experience in a trade or profession before you purchase a service franchise. Due to the nature of the work, sales volumes are usually lower with service franchises.
What They Are: A food franchise is a business that prepares and sells food to the public. There are three types–fast food that provides takeout only, fast casual restaurants that have limited table service and full service restaurants that provide complete sit-down meals.
Benefits: Many food franchises are widely known, giving you the benefit of instant brand recognition. Like retail businesses, a food franchise business opportunity has the potential to bring in large sales revenue. For those who have always dreamed of opening a restaurant, franchises eliminate the need to develop a menu and make decisions regarding prices.
Drawbacks: Food franchises are costly to open, not just because of franchise fees, but also due to the price of equipment that must be purchased to prepare food. There are many laws and regulations regarding food safety that food franchise owners must be aware of. Depending on the size of the restaurant, a large number of employees may be necessary, and evening and weekend hours are usually a must.
TIP: Look for an equipment leasing company to finance the equipment portion of your franchise start up cost.
In conclusion, if you are considering a franchise opportunity, make sure to research the company and speak with a professional first. With an ever growing global network of franchise opportuniies, you have more choices than ever to start your own business.
You have the opportunity to gain knowledge and skills, and to learn from a tested franchise model. The franchise model has been around for more than 100 years and has helped to shape the global economy.
If you are interested in owning your own business and having the support of a brand and community behind you, then exploring franchise opportunities may be the perfect business model for you. Franchises allow you to be an entrepreneur without all of the risks associated with starting a traditional business.