Why buy a franchise vs. non-franchise business?

First and foremost, it is well recognized that proven franchise systems provide a higher potential for business success than non-franchised businesses. Why? Consider the amount of time and energy that would be needed in developing effective advertising, marketing, management systems, location site selection and lease negotiation, build-out specifications, equipment research, financing, supplier relationships, etc. necessary for successful brand penetration and efficient operations. For most, the cost of royalties associated with a franchise is a well thought out and worthwhile investment in the success and prosperity of their business, while providing the “recipe for success” of an established system that has been successfully proven and replicated multiple times in diverse markets.

01BRAND AWARENESS

A critical key component of any business is the ability to attract, acquire and retain new customers. Being part of an established brand provides your potential customers with a name they will know and trust – thus they are more likely to visit providing your business the opportunity to deliver a great experience and retain long-term customers. In addition, a franchise provides the proven operating systems and on-going access to the latest enhancements, updates, system improvements and channel solution providers.Have you ever wondered why there are so many Planet Fitness locations, or how come RE/MAX and Five Guy’s Burgers seem to be everywhere? It’s the same reason there are multiple Domino’s Pizza’s, Jiffy Lube’s or Sport Clips in almost every major city. That’s because brand recognition attracts more customers and, proven operating systems help retain and make those customers feel more comfortable about quality or longevity of the business.

02HIGHER MONTHLY RECURRING REVENUE

Being part of a national franchise system will allow you the opportunity to attract and retain more customers thereby increase monthly revenue. Proven operational systems and effective marketing reduce costs, thereby enhancing monthly net revenues.

03BUILD MORE EQUITY

Franchises typically demand a higher resale value in the market. Why? It’s simple – would you rather buy a Subway or some unknown independent sandwich shop? Buyers will usually prefer stepping into a known franchise brand with proven systems and training that is provided to ease transition of ownership, not to mention the continued advantages of name recognition, economies of scale, purchasing power, etc. of a national franchise system vs. the possibility of losing customers and/or employees due to change in ownership or needing to reestablish vendor relations, supply chains, etc. As your business grows and becomes more profitable, so too will your equity. With recurring revenue from regular customers, the more predictable revenue makes owning a franchise more attractive to potential buyers.

04MULTIPLE OWNERSHIP MODELS

With established business systems and operational procedures franchises offer attractive investment opportunities for owner/operator, semi-absentee and multi-unit ownership. Even if you have minimal to zero experience in a specific industry, you can often still be very successfully owning a location or chain of locations because of the franchisor’s training and support.

05WIDE RANGE OF INVESTMENT LEVELS

Depending on your financial means, investment capital, location and work/lifestyle goals, there are literally 100’s of different opportunities for you to choose from. Single unit, multi-unit, area developer and master options are offered from differing brands. It is important to find an experienced broker/consultant who specializes in the franchise industry and, who can help align your personal and financial goals with opportunities well-suited for you.

06EASIER TO FINANCE

As part of a franchise organization, accessing business financing can be easier than you might think. Most brands have pre-arranged contacts with pre-approved SBA funding and equipment financing in place. These brands will have detailed schedules for equipment, tenant improvement needs, burn capital, timelines for development and business ramp-up to streamline your funding application & approval process. With SBA loans, 401K rollovers, and HELOC’s being just a few financing options often available. At the Franchise Group, can help provide you with options from some of the top funding resources in the country.

07THE REAL BENEFIT – WORK / LIFESTYLE BALANCE

There are countless examples of multi-unit franchisees enjoying huge success owning large chains of locations around the country such as Domino’s Pizza, Sports Clips, Jiffy Lube, Meineke Auto, Planet Fitness or Orange Theory’s just to name few. Many of these operators have 20, 80 and even 200+ units under their control! Really think about this for one moment… many multi-unit owner / operators have 40+ units of a franchised brand. Why? The owner of 40 Domino’s Pizza locations surely knows how to make pizza by now. He/she obviously knows how to build-out locations, has no issue with getting additional financing, selecting equipment, hiring staff, buying inventory and supplies etc. so why wouldn’t he/she simply open their own pizza delivery business?

Because they understand the secret sauce to making their “work / life” balance better. They understand that paying a franchise royalty fees gives them greater free time and flexibility when running their businesses. Royalties are the magic that makes the formula work. What would it cost you to develop and hire on-going management for; training, marketing, advertising, web development, social media and customer support team? What about your site selection, buildout and equipment team? The answer is… a lot more than the typical owner could ever spend independently. You certainly could not hire this level of on-going support for less than 10% of typical location’s gross sales, and the vast majority of franchise royalties today are between 6% and 8%. The wonder of royalties is that instead of an individual owner footing all the bills to develop and run his/her business, these expenses are shared among other franchisees within the organization. Being part of a franchise system provides the advantage of having an entire organization of knowledgeable, industry professionals dedicated to the success of your business – including ongoing R&D to identity and introduce new products and services, supporting your business and continuing to improve methods and procedures to enhance unit level operations and profits. Sure, you may be able to do all of these tasks and support items yourself but, isn’t better to work smarter than harder, and have others help develop systemwide improvements so you can benefit from other people’s efforts? Multi-unit franchise owners clearly understand this and are able to build large business empires far greater than they could do on their own. Franchises offer on-going support, education and system enhancements for their franchisees as well as, networking opportunities with other franchisees to exchange best practices and ideas to continually refine and improve their business to achieve greater success and enjoy more free time and attractive lifestyle. With over 1,000 different franchise opportunities, covering dozens of different industry segments, there is bound to be a brand well-suited to your lifestyle, work, and financial goals. At the Franchise Group, we have one of the largest databases of franchise brands, and franchise resale opportunities in the country. Plus, we have a team of experience franchise consultants who will take the time to help you evaluate opportunities that are well-suited for both your personal and financial goals – whether that is one of the 300+ different franchised brands we work with or an existing business for sale in your area. Contact us today to learn more or explore opportunities.