The statistics of franchising success has been a debatable topic for years. In a study conducted in the 90s, a group of franchisors were asked about success rates of their franchisees and the survey averaged at 5% failure and 95% success rates. However, the data provided by franchisors were not verified. Even to this day, franchisors use this statistic to encourage people to invest in their franchise.
We all know that franchisors could easily skew statistics in their favor to sell people on their business model. To give you a clearer picture of franchising, let’s skip the numbers and tackle elements of a franchise business model that have been beneficial to the success of franchisees around the world.
- Tested Business Model – One of the best parts about franchising is that you’re paying for a tested concept. Your main task is to follow the franchisor’s guide book to success, and skip trial-and-errors involved in starting a business from scratch. In most cases, franchisors would give you access to case studies, access to existing franchisees who you could talk to, and tons of detailed reports. Study them religiously, visit current franchise locations, and perform your own research, so you’ll have a more balanced look at the real numbers of a particular franchise.
- Secure Financing Easier – In-house franchise financing is available for people interested in this business model, but they’re not known for having the lowest interest rates. But if you’re having a hard time securing a business loan from a bank, this could be a solution for you. Make sure to compare rates before signing on the dotted line.
- Site Selection Assistance – Depending on the franchise you chose, franchisors could provide you with specifications for the most ideal franchise site. This may include type and size of location, ideal nearby tenants, traffic conditions, recommended rental cost, or a particular area. Some franchisors even provide a list of sites that you can choose from, but in these cases, you won’t have any other choice but to decide from that list.
- Skills Training – Franchisors not only provide training for your employees, but you, as the business owner, will also undergo (often much-needed) education on business aspects such as accounting, management, and marketing. In some cases, franchisors even provide ongoing training for your staff to learn new skills.
- Ongoing Support – Even if franchises are built from a proven business model, they can still suffer from the many challenges that ultimately come up in the marketplace. Fortunately, franchisors can guide you through rough patches and provide ongoing support during PR disasters that affect all branches, dismal sales due to seasonal changes, or other possible problems that may arise. Your success as a franchisee will reflect back to the franchisor, so you’d be surprised at how much a franchisor is willing to help you at every bump you encounter.
Franchising isn’t a built-in-and-forget-it kind of business. There are also risks involved in going this route. In addition, franchising still requires plenty of work, much like a traditional business. But it remains an attractive business model because of the benefits listed above.
At National Franchise Business Solutions, we work closely with aspiring entrepreneurs to find the business model that best suits their passion, skills, and budget. For many, that is a franchise. But when you are looking for a franchise business, you don’t want to be limited to just one brand or even one industry. When you work with us, provide you access to over 600 franchise brands across a wide range of popular industries. Through a multi-step process, we help narrow down the decision-making process and introduce you to only the brands that may be a good fit for you.