It’s not for everyone, but it has worked for millions of entrepreneurs and business owners through the years. It’s worked well for plenty of customers and clients, too.
Franchising is a business model in which entrepreneurs start businesses based on the name, logo, products or services, processes, procedures, and ways of doing business that have already proven to be successful for the franchisor. Think of Wendy’s, Hilton Hotels, Freeway Insurance, Paneless Window Cleaning, and Plato’s Closet, among countless others.
What are the benefits of franchising? Is franchising the right business model for you? There are several advantages of a franchise, and some might make you stay away. Take a look at the franchising pros and cons, starting with ten of the leading advantages of owning a franchise.
#1 Instant Brand Recognition
Walk down any business district in any city or town, and you’re likely to see plenty of familiar logos — even if you’ve never been to that city or town in your life. That’s probably one of the key benefits of franchising.
Your customers or clients pay a visit to your franchise establishment because they’re already familiar with the premise of what you’re selling and trust that they’ll have the kind of experience they’ve had in the past in businesses with the same name.
#2 No Introduction Is Necessary
One of your main challenges in getting customers in the door of a new business is that you have to come up with an introduction of sorts. Who are you? Why are you a better option than your competitors? Are your offerings better? Cheaper? Is customer service a primary selling point?
If you’re buying into an established brand, most of those questions have been answered to the satisfaction of most of your customers before they walk in the door or call you up. No introduction is necessary. You already have a track record even before your first day.
#3 Your Advanced Business Education Is Free (You’re Welcome)
Do you know how to run a business? You’re confident that you can figure it out as you go, but if you’re a first-time business owner, that’s only optimism talking.
If you’re a franchisee, on the other hand, it’s in your franchisor’s best interest to make sure you get a proper education in what and how to sell and how to make your business a success. It’s not only upfront training, either. It’s a “pick up the phone or drop us a line and ask us anything” thing. It’s 24/7 support from people who know how to run not just any business but your business.
#4 The Franchise Is Highly Affordable (or Not)
What’s meant by that contradictory statement is that one key advantage of the franchise model is that you can find an affordable franchise at just about any startup cost point.
If your franchise of choice is a luxury hotel in Manhattan, you’d better have several investors with very deep pockets. But on the other end of the cost scale, you might buy into a service business — think maid service or insurance agency — that you can run on your own, from your own home or apartment, and with no employees and very little or no gear, equipment, or inventory.
So, how much does a franchise cost? On the lighter end, your franchise fee and startup costs might run as little as a few thousand dollars if you buy into such a service franchise.
#5 Your Products or Services Have Built-In Appeal
If you’ve done your homework before investing in the organization, you know that what you have to offer will find eager customers. That is, your research has shown that the franchise is successful and it’s already found a motivated customer base. The brand has already done much of the sales work for you even before you open your doors and start selling.
#6 No Failed Science Experiments
In the literal sense, a failed science experiment might be the work of an eager young chemist wannabe mixing two or more chemicals together to see what happens. What happens is that stuff catches on fire.
In the business world, a failed science experiment might involve a very talented salesperson convincing you that a product outside of your inventory mix will sell like hotcakes. Or that one very expensive piece of equipment will actually make your job easier, and your profits increase like crazy.
There are no failed experiments in the franchise business model because you’re selling what’s proven to be popular over the years. Or it’s a new product or service that’s been carefully tested before it’s been scaled up for all franchisees. You’re not spending thousands of dollars on the unfamiliar just to see what catches fire.
#7 The Marketers Have Your Back
How much does a successful advertising campaign cost? How can you tell a good marketing firm from a bad one? How do you write a successful TV commercial or find someone who can? Which social media platforms have the best influencers for your company? What are influencers, anyway?
These are just a handful of the questions you don’t have to ask yourself when you’ve gained the marketing and promotional support of a successful brand. Part of your franchise fee will go toward shared advertising that will benefit you as well as the other hundreds or even thousands of franchisees.
You don’t have to be a deep-pocketed marketing guru on top of the many other talents you must have to run your business. You can leave that to the experts.
#8 You’ve Got Collective Buying Power
Sellers of just about everything would rather sell 100 of their products to one customer than have to find 100 customers who’ll each buy one thingamajig. That’s a lot more costly, labor-intensive, and time-consuming. And it’s why you’ll usually pay less per unit when you buy more units of whatever the vendors are selling.
Business franchises take advantage of their collective buying power. The franchisor buys raw materials or inventory for hundreds or thousands of franchisees, not just for one business. So your franchisor usually gets a much better deal — and so do you.
#9 Money People Like You Better
Try finding investors, business partners, bankers, or others with money who’ll finance your business idea that’s hard to explain and has zero customers from the get-go. Then admit that you’ve never owned a business before. Good luck.
What the money people like much better is knowing that a known and respected franchisor has invited you to join their operation and will provide their extensive training and support. It’s your own company, but right from the start you’ve got those built-in customers, brand recognition, and products or services that people already know and use.
You’re likely to find a whole different level of acceptance and credibility when you’re backed by such a familiar name.
#10 So Do Employees, Vendors, and Landlords
Everyone likes you better — and takes you more seriously as a business owner — when you’ve got the name, reputation, and product or service mix of an already familiar and trusted name. Now go out there and sell!
There Are Some Disadvantages of Franchising Too
As mentioned, this business model isn’t for everyone. There are a few franchise disadvantages. Here are what might be the top three.
#1 It’s Highly Affordable (or Not)
Yes, that was one of the stated benefits of franchising. But it can be a disadvantage, too. Some franchises are simply beyond your means. Maybe by hundreds of thousands of dollars.
That’s why such cost items as franchise fees and royalty costs should be the first thing you ask about when you contact a franchise representative. Don’t waste your time on a franchising opportunity you can’t possibly afford.
#2 They’re Innovative, You’re Not
If you’ve chosen the right franchisor, it’s a company that’s learned how to take a competitive advantage through innovative products, services, and ways of doing business. Whatever they give you to sell has a proven track record. It works. Your clients or customers will love your company in Spokane because they’ve loved it in Honolulu, Boise, Kalamazoo, and Ankeny, Iowa.
That’s a huge advantage, unless your business goal is to bring to market something that’s never been there before. You have a new, high-tech invention, an inventive product mix that is sure to start a trend, or an ingenious process you want to try out.
Great. But don’t try it out within your franchise business. Your franchisor is a seller of business concepts and ideas, not a buyer. The company has already innovated a successful way of doing business and doesn’t want to try it your way. Sorry.
#3 It’s 100% Your Company, But…
There is that franchise agreement you’ll sign. It says you’ll carry their name and branding, only buy and sell the franchisor’s products or services, and conduct business in a certain way. They’ll also get a cut of your profits. (Ask your franchise rep for details.)
It’s your company, and you’re the boss. But you must run your company in a way that has worked for other franchisees under that same name. That level of conformity, after all, is one of the leading advantages of operating a franchise from your customers’ perspective. If this business model has worked for dozens or hundreds of other entrepreneurs over the years, it will probably work for you.
Let Freeway Insurance Show You Its Own Benefits of Franchising
Name one benefit of franchising. We can probably give you 30, starting with the affordability of becoming a Freeway Insurance franchisee.
Reach out to Freeway, and we’ll show you how to succeed with top-tier training, ongoing support, and strong brand recognition. We’ll even help you identify and gain the certifications you’ll need to become a licensed insurance agent in the state of Illinois.
As an independent Freeway agent, you’ll have a roster of name-brand insurance products to offer a customer base already drawn to our brand. After all, Freeway Insurance is one of the nation’s largest and most respected personal lines insurance companies — and you’ll be one of us.
Call your Freeway Insurance franchise representative today at (877) 822-3024. or Contact us.
