Written by
Matt Frentheway
Written on
June 10, 2020

Franchising: A Business Model Built for Success

Countless thousands of small business owners have succeeded beyond their wildest dreams as franchisees. Comparatively, there are thousands of small business which fail each year because the business owner did not have systems and procedures in place that would assure them of success.

While being a franchisee is not for everyone, there are many reasons why it is a business model that has brought success to many. Let’s take a look at five reasons why the franchise model has brought lasting business and financial success to so many small business owners, and how it can bring you small business ownership success.

Franchising provides proven products, systems, and procedures that you don’t’ have to develop yourself.

When sitting down and brainstorming what type of product or service to market, a potential small business owner is faced with a myriad of choices. Once the offering is decided upon, the new business owner must secure a location, determine what/how much inventory to bring in, develop all of the systems, policies, and procedures for the business, hire qualified personnel, and make many more decisions which will determine the fate of the company.

However, franchisees are relieved of much of this pressure. Once a franchisee decides upon which franchisor they are going to represent, they can rely upon that franchisor to provide them with a blueprint for success. The franchisor has successfully implemented and experienced just about everything a new franchisee needs to set up their location with all of the internal and external processes they need to succeed. The franchisee has the peace of mind knowing the franchisor has already blazed the trail and that they can follow the leader to their small business success.

Franchising reduces risk.

Because of the economic downturn caused by COVID-19, there have been many small businesses that have been unable to continue operations. Unfortunately, many of them failed to survive, not only because of financial distress, but they didn’t have the advice and support they needed from an organization with the experience they could rely on. They certainly couldn’t turn to their banker for help.

Restaurants are an excellent example. While there have been many small, family-owned restaurants that failed to survive the crisis, on the other hand, there have been no McDonald’s franchises that have disappeared because of financial or systemic failure. McDonald’s franchisees have had the support of their franchisor to monitor and manage finances, products, inventory, personnel, and other vital ingredients necessary for their survival. Their risk is substantially reduced because of the power of the brand behind them.

Group purchasing power.

Franchises have the advantage and benefit of having lower pricing due to their franchisor committing to vendors for large quantity purchasing for the benefit of group-discount pricing. Because of this, individual franchisees can buy products at a steep discount compared to the independent small business owner they compete with. This purchasing power allows the franchisee to pay less and have a higher profit margin, which is a big reason for the success of franchises.

Name-brand recognition.

When taking a road trip and traveling along one of America’s highways, travelers don’t look for signs touting the names of small diners at the end of the exit ramp. They usually look for the names and logos of restaurants that they’re familiar with and comfortable with. For this reason, you’ll see very few mom-and-pop eateries in the cluster of restaurants at the end of the exit ramps. This is because when away from familiar surroundings, people find comfort in something stable that they can trust.

The same holds true when they’re at home. You very likely won’t see women looking for an independent beauty supply business to purchase their products at; they’ll be seen frequenting franchised stores like Ulta to get their personal care products. That is the power of name brand recognition.

Control your destiny.

One of the major reasons, in addition to financial gain, that people go into business for themselves is the ability to chart their own course in life and not be dependent upon a company to determine their fate. They recognize that asking a supervisor for a raise in pay is not going to create wealth and independence, but fosters dependence upon a third party for their financial future. This is a position that fewer and fewer individuals are settling for, as evidenced by the rapid increase in the number of freelancers and gig workers.

Owning a franchise allows you to determine your compensation and level of success. You are the team captain that makes the decisions that will affect your organization’s success, as well as your own. You are not dependent upon anyone else, and you don’t have to go it alone. Your franchisor will stand behind you, support you, and encourage you as you build YOUR business, not someone else’s.

When opening and building a small business, you can choose to go-it-alone or partner with a business that can assist you in all of the decisions you need to make to succeed. Franchising is the best business model for those that want a blueprint to follow when they start and operate their own businesses. It is truly a model built for success.

Matt Frentheway

As a successful franchisee and entrepreneur, I can help you find the best opportunity to realize your dream of being a profitable franchise owner. Using my proven process as a franchise consultant, we’ll define your goals, narrow the field, and select the best franchisor for you to achieve financial freedom.