Buying a Franchise

Why Buy a Franchise?
People are attracted to franchises mainly because of the track record of success that many of them have been able to achieve over many years. That is, a new business owner would be looking at the more secure guarantee of success by following the formula already proven by the owner of the franchise. They would be attracted to the combination of benefits, which the franchise supplies in the way of a brand name, experience, proven systems, marketing expertise and economies of scales that are part and parcel of an established long trading Franchisor.

It is a well-known fact that a good franchise generally has a much higher success rate than any other type of business. However, even though the success rate for franchise owned businesses is higher than independent operations, there is still never a guarantee of success for the new franchise owner. Never make the mistake of rushing into a business franchise just because you know the franchise name and because it appears from the outside that they are successful. Every business has risk and just because the franchise is successful in other cities or locations, does not guarantee it would not fail in your area with you operating it.

A potential new owner must therefore carry out full research and examination of any franchise opportunity to ensure that its chance of success is high. Before all this, however, a new owner must determine whether they have the character and the desire to own and run a business, after taking into account their attributes and skills.

If you are someone worried about taking risk, then franchising may be the best option for you. This is because other people have already taken the risk by establishing their own franchise operation and they have brought it to its current stage successfully. The fact is the proportion of new businesses that fail within the first years of operation is much higher than the proportions that succeed.

Be sure, therefore, that you have taken into account the risk of the business failing. Remember whatever business you choose (whether a franchise or a standard business), all would require hard work, dedication and sacrifice. They are all the essential ingredients for prospering in any business venture, including a franchise.

Do you Really Want to Buy?
When considering whether to buy a franchise, start a new business from scratch, or buy a standard business, one of the first questions to ask yourself is why you want to own a business in the first place. The next question is why you would want to look at a franchise rather than a standard business. The answers you come up with would give you an indication of which way to go.

Here are some points that may clarify how you really stand:

1. You have some great ideas that you want to develop.
If you have some of your own ideas that you want to develop, then the franchise option is not for you. There is little opportunity for you to pursue your own dreams in the franchise type of business. If the products are not the same as those owned by the franchisor or are not compatible, then it is likely they would be rejected. With a franchise you have to follow the vision of the Franchisor 100% not your own.

This does not leave room for you to develop your own ideas into your own your venture. Most of the ideas of any franchise have already been set in concrete by the franchise owner. While they may be happy to listen to your suggestions most franchises would not entertain new ideas from Franchisees. If you have ideas that you want to bring to the attention of the world, and you believe they would be successful, then it’s best to look at starting your own business or buying a business with similar ideas as your own.

(e.g, imagine buying a KFC franchise and telling the KFC bosses that you wish to change the colour of your KFC franchise business to green because you want it to be more environmentally friendly. KFC’s red and yellow colours were introduced because research showed that these colours generated hunger in the eyes of the customer. It is unlikely that KFC would allow you to develop anything other than their established format and systems.)

It’s best for you to start off your own business and plan for success by developing your own ideas and products if you want to have more say in your business future.