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7 Benefits Of Franchising

The thought of owning your own business can be appealing. It allows for a more flexible work schedule and puts you in charge from the start. What many people don’t consider before opening a business, though, is that only 1 out of every 12 startups finds success. That means 92% of startups fail. That’s why you should start a franchise instead.

What is franchising, exactly? Franchising involves a franchisee (someone interested in starting a business) paying an initial fee and leasing a property to use a company’s brand name and resources (franchisor). Not only does franchising benefit the franchisor in that it expands their brand to new areas, but it also benefits the franchisee as well. There are several different types of franchising, so anyone interested in starting one will find the right one for them. This article aims to discuss those types, the advantages of franchising, and the reason why franchising is so successful.

What Are the Benefits of Franchising?

There are seven main advantages of franchising for the franchisee, including assistance in running the business and brand recognition among customers. These and more are described in detail below.

  1. Low Startup Costs

For those who start their own businesses, initial and first-year costs typically range from $30,000-$40,000, although sometimes it can even reach into the millions of dollars depending on location, staff size, inventory, etc. Franchise fees cover many of these costs upfront so that you can work towards making money the rest of the year.

What are the other costs associated with operating a franchise? They may include:

  • Royalty payments to the franchisor
  • Travel expenses for training
  • Inventory or stock costs
  • Recruitment costs
  • Payroll

Depending on the franchise agreement, some of these costs may be included in the startup fees.

  1. Easier Access to Financing

Those starting a franchise may have an easier time getting funding than those starting an independent business. For one, some franchisors offer internal funding to help franchisees pay for equipment and startup costs. If you find your franchise on the SBA Franchise Directory, you may also have less-strict borrower qualifications than independent business owners.

  1. Business Assistance

Something you get when starting a franchise that you might not when starting your own business is business assistance. With a franchise, you will automatically have a network of people to contact for help if needed. This network includes both the franchisor and other franchisees using the same brand name. For your own business, on the other hand, you would have to create a business model, products or services, and more from scratch.

Many franchisors will also provide you with training, equipment, and supplies to ensure that you are well-equipped to represent their brand. You may even receive a business plan from the franchisor indicating what works and what doesn’t when trying to attract new customers and run a successful business.

  1. Brand Recognition

Restaurant Owner

One of the most important opportunities you get when starting a franchise is the ability to use a recognized brand’s name. That, in itself, is the nature of franchising. Even this seemingly simple opportunity has a major impact because it comes with an already established customer base. Instead of having to spend thousands of dollars to even create a new brand and advertise it, you get to save that money for other business expenses. Your franchisor may even assist you in creating an advertising plan for your branch of the franchise. Brand recognition automatically puts you over one obstacle that other startup businesses face.

  1. Lower Costs on Goods

Because a franchisor has to order more goods as a whole than a small business does, your franchise may be eligible for bulk quantity prices. This means you can save money on what you need for daily operations and inventory and put that towards growing your business instead.

  1. Be Your Own Boss

Many people decide to franchise so that they can be their own boss without having to run a business alone. As a franchisee, you have the ability to create your own schedule and possibly to work from home if you decide that you want to do so. Some franchises are even designed to be run from home. You will have to adhere to the franchisor’s standards and guidelines, but for the most part you will have the freedom to run your business how you want and can decide what path to take your career. Franchising also allows you to reap the benefits of your own efforts.

  1. Higher Success Rate

Although a lot determines how successful your business will be, the odds of success with a franchise are higher than if you had started a business on your own. In fact, 85% of franchises survive more than five years of business compared to only 37.5% of startup businesses. This is because you, as a franchisee, have more resources from the start than your entrepreneur counterparts. These resources include a business plan, a customer base, training, and more. With these items at your fingertips, you can focus on sales instead of getting your business off the ground.

Why Are Franchises Successful?

Franchises tend to have more success than independent businesses because of the wide network franchise owners have. Franchisees have the support they need to get them through challenging times from both franchisors as well as other franchisees. Many of the benefits listed above contribute to the reasons franchises are so successful listed below.

Background Checks

Franchisors look into the financial history and background of each person who applies to be a franchisee. These background checks allow franchisors to verify that the new owners have what it takes to succeed. Franchisors want to make sure that their franchisees represent the brand well and can make money for them. If you are approved to be a franchisee, you can be sure that you are already on the right track to succeed. To make your application the best that it can be, do research into the types of franchises out there and find the one that’s the best fit for you based on what you want out of franchising. These types are:

  • Business Format Franchise: This is the type of franchise that most people are familiar with. It involves getting a business plan, procedures, and ongoing training from the franchisor. Restaurants, retail stores, and fitness centers fall into this category.
  • Job Franchise: Franchisees can run the franchise from home and can run the business by themselves or with just a few employees.
  • Product Franchise: Franchisees’ entire business focuses on distributing the franchisor’s product. Manufacturing may also be involved in this type of franchise.
  • Investment Franchise: This type of franchise requires a large investment and for the franchisee to either hire their own management or use management selected by the franchisor. Examples of this type of franchise include larger restaurants or hotels.

Also look into industries that you might have more knowledge of. If you understand the industry you are trying to get into, then you’ll have a higher chance of success.

An Established Business Model

The business model you receive from the franchisor has been proven to work. The mistakes have already been worked out by the franchisor. You won’t have to try to figure out your own model, which means you can skip the planning phase and go straight to making money. Getting started on making money quickly sets your business up for success.

Brand Recognition

Customers will visit your business almost as soon as you open because they recognize the brand. For example, if we ask you “What are examples of a franchise?,” national brands from McDonald’s to Target to The UPS Store might come to mind. The same is true for your customers. They know what to expect from that brand and its products or services. This recognition allows you to start gaining revenue right away instead of having to worry about advertising first to get your business’s name out there.

Network Support

Your franchisor knows how to run a business, as do franchisees who opened their businesses before you did. If you need help with anything, they are there to give you advice. Having these people to fall back on allows for greater success because you are learning from people with experience instead of trying to figure everything out on your own. Franchisors often provide you and your employees necessary training, too. Network support also sets franchises up for success because when one particular franchisee is struggling with business, the franchisors have other franchisees who can make up for the lost revenue.

Overhead Monitoring

Something franchises have that independent business owners don’t is a franchisor that can see when something with a certain location starts to go wrong. It could be anything along the lines of the economy in a particular area crashing or the demographics in a particular area changing. Whatever the case may be, franchisors have the experience and the data to see when one of their franchisees might be struggling. They can offer them advice on what adjustments to make to boost business.

Find Franchise Opportunities Using

If after reading the benefits of franchising you feel that you’re up for the challenge, visit We have a directory of a wide array of franchises. You can filter by state, franchise cost, category, sales index, and more. Through the directory, you can also request more information from the franchises that interest you. Ready to start the career of your dreams? Start searching today.

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