Franchise businesses are responsible for almost one-half of all retail sales in the United States. There are many benefits to Franchisees from participation in a franchise system.
Minimum Risk and Enhanced Opportunity for
Success
Franchising is very successful because it markedly improves
the odds for business success. The failure rate of new non-franchise business
start-ups is high because the owners have to go through the learning curve of
operating that specific business. Franchises are based on a proven concept --
the Franchisor has gone through the learning curve and has already invested a
great deal of time, skill, effort, and money to start up, refine, and prove the
concept. The Franchisor provides each Franchisee with knowledge and insight
gained through years of experience and a successful operation. Statistics show
that estimates of failure rates among new non-franchised businesses range from
60% to 90% while many franchised businesses boast a 95% success rate. The
primary reason buying a franchise is to minimize risk and enhance your
chance of success.
97 percent of Franchisees remain in business after their first year; compared to 62 percent of those businesses individually started-up. After ten years, 90 percent of those Franchisees still remain in business, while 85 percent of those individual start-ups do not.
Statistics compiled from the U.S. Department of Commerce/Industry
and Trade Administration and Future Small Business of America
Proven System of Operation
An
attractive feature of most Franchises is that they have a proven system of
operation. This system has been developed and refined by the Franchisor. A
Franchisor will typically have a highly refined system based on the entire
experience of all its management, operations and training personnel.
Tools for Success
Franchising
provides the tools for success. A complete system is provided. The Franchisor
provides important assistance as the business is being started and continues ongoing.
Technical, Operational, and Managerial
Assistance
The Franchisor provides technical, operational, and
managerial assistance. These services make it far easier for a Franchisee to go
into business, and the ongoing assistance is equally valuable.
Experience of Franchisor
The
experience of the Franchisor's management team increases the potential for
success. This experience is often conveyed through formal instruction and
on-the-job training.
Standards and Quality Control
The
Franchisor sets standards and provides a mechanism for maintaining quality
control.
Less Operating Capital
The expertise
provided by the Franchisor should enable a Franchisee to operate with less
working capital than the non-franchised business.
Efficiency in Operation
Franchisors
discover operating and management efficiencies that benefit new Franchisees.
Operational standards set in place by the Franchisor also control quality and
uniformity among Franchisees.
Management Assistance
A Franchisor
provides management assistance to a Franchisee. This includes accounting
procedures, personnel management, facility management, etc. An individual with
experience in these areas may not be familiar with how to apply them in a new
business. The Franchisor helps a Franchisee overcome this lack of experience.
Business Plan
Most Franchisors help
Franchisees develop a business plan. Many elements of the plan are standard
operating procedures established by the Franchisor. Other parts of the plan are
customized to the needs of the Franchisee.
Start-Up Assistance
The most
difficult aspect of a new business is its start-up. Few experienced managers
know about how to set up a new business because they only do it a few times.
However, a Franchisor has a great deal of experience accumulated from helping
its Franchisees with start-up. This experience will help reduce mistakes that
are costly in time and money.
Research & Development
Franchisors have an ongoing interest in the development of their
franchises and many maintain permanent research and development departments.
The results of these efforts are shared with all Franchisees.
Advertising & Promotion
Funds
pooled from all Franchisees enable the franchise to have a national marketing
and advertising programs to gain wider exposure.
Marketing Assistance
A Franchisor
typically offers several marketing advantages. The Franchisor can prepare and
pay for the development of professional advertising campaigns. Regional or
national marketing done by the Franchisor benefits all Franchisees. In addition,
the Franchisor can provide advice about how to develop effective marketing
programs for a local area.
Co-Op Benefits
Franchises also
benefit from the co-op nature of the franchise program. As a franchise system
expands, many positive things happen. The brand name becomes better known;
advertising increases; synergies develop; and all benefit from the sharing of
experiences, buying power, and more.
Group Purchasing Power
It is often
possible to obtain lower-cost goods and supplies through the Franchisor. Lower
costs result from the group purchasing power of all franchises.
Comparative Assessment
The ability to
compare one store to another within a franchise system can be very valuable.
Research Before Spending
Another
reason why it is prudent to buy a franchise is that a franchise investment can
be thoroughly researched before any significant expenditures are made. With a
new non-franchised business start-up, you are always operating in the dark and
it can be difficult to get a handle on the many aspects of a new business; but a
Franchisor has a wealth of information about all aspects of the franchised
business.
Opportunities
Unique opportunities
are provided by franchising. The opportunity to own one's own business and the
rewards associated with success are provided by successful franchises.
Franchisees can be in business for themselves without having to be in business
alone. There is pride in being associated with a successful franchise.
Franchising provides personal growth and advancement in business knowledge and
skills. The opportunity to work with and for people is valued by many
Franchisees.
A Gallup Poll of Franchisees found that over 94% considered themselves successful and over 75% said they would buy their franchise again if they had it to do over.
Kokopelli Sonoran Grill is part of the Restaurant Industry. $376 billion was spent on restaurant meals last year. There are more than 831,000 restaurants in the US.
