Why buy a franchise or a start up?
Buying a franchise is one solution for buyers that we work with. As a business broker, many buyers tell us that they can not find the “right” business in the “right” part of town. It can be frustrating trying to find an existing business with the all the “right” characteristics. This is where a start up or a a franchise might be the best option.
Benefits of Franchises
Although it is exciting to be your own boss and make all the decisions of a business. If you are a first time business owner, this also means that you will be likely getting a business with limited systems, limited support after the transfer period and no other businesses to compare your business to for improvement. This can be very challenging.
A franchise model offers the franchisee (especially new business owners) the ability to grow a business under a common brand and share in the benefits of a larger group of business owners with previous experience.
Though each business is independently owned and managed, all franchisees share in the collaborative benefits of the organization through the support and insight of the franchisor including:
- Guidance on improvement opportunities
- Benefits of using already produced trademarks, patents, and other proprietary information
- Training from successful operators
Better chance for success
The U.S. Department of Commerce has shown that franchise revenues accounts for over one-third of all U.S. retail sales.
According to studies on the economic impact of franchises, franchise businesses produce over 3 percent of nonfarm private output in the United States, and when the total contribution of franchise businesses was considered (which includes the goods and services used or purchased by franchise businesses and their employees), franchise businesses account for approximately 9 percent of nonfarm private output in the United States.
Government research over the years has indicated that the success rate for franchise-owned endeavors is significantly better than the rate for non-franchise-owned small businesses. In short, the good news is that franchising makes up a significant part of the national economy and presents a statistically better chance for success than other business options.
More than Just Restaurants
Often time business buyers think of franchises as just restaurants and food services business. But there franchises in almost every industry today. To help you better understand the franchise models, here are 5 different types of franchises:
- Business to Business Franchises. These franchises sell to other business. Some are home based and some are office based. This would include printing, communication and sign franchises.
- Management Franchises. These franchises typically are regionally based and involve developing and management of teams to provide a product or service. They own a territory and then hire franchisees to operate franchises. They are in a sales and management role. Examples: Regional Developers, Master Franchisers
- Retail Franchises. This franchise operators from a retail outlet or store front. Examples include: fashion, IT, Technology, food, education, leisure and services.
- Investment Franchises. This type of franchise requires a high investment and the owner will work in a managerial and advisory role opposed to a direct role. The location will have a general manager running the business. Examples include: Hotels. larger restaurant chains, department stores.
- Single Operator Franchises. This type of franchise the owner is the operator. They are the person performing the work. Examples include: Training, smaller retail franchises, vending.
If you think franchising is an interesting option to you, please contact us for a more detailed discussion. We offer over 350 franchising and start up opportunities.