5 Reasons to Buy a Franchise

reasons to buy a franchise

Estimated reading time: 4 minutes

Starting your venture from scratch can be risky if you strive to become a business owner but have minimal business experience. The U.S. Bureau of Labor Statistics reported that 20% of small businesses fail in their first year, 30% fail in their second year, and nearly 50% fail after five years. In addition, launching a startup business requires planning, marketing, legal fees, and capital, to name a few. One way to move forward with your entrepreneurial dream, and have a greater probability of succeeding, is to buy a franchise.

That is because all of the work has been done, and you will benefit from ongoing operational support and marketing assistance. You need to follow the proven formula and succeed in your franchise. If you are considering becoming a franchise owner, this Balboa Capital blog article is for you. It lists five reasons to buy a franchise.

1. Location brings success.

The classic advice of “location, location, location” might sound cliché, but it rings true in business. The location of a franchise can either help it become successful or wind up attributing to its demise. If you buy a franchise and it is not located near a busy highway or in an area with high foot traffic, potential customers will not see it, which means lost revenue. Franchise companies want their franchisees to succeed, so they are always looking for new locations that can help maximize sales.

They can select sites based on actual data by researching demographic information, competition, population growth, and income trends. Doing this eliminates the guesswork and helps you choose a location that has been deemed acceptable based on several different criteria.

2. Training is provided when you buy a franchise.

Once you have picked a location, signed the franchise agreement, and obtained financing for your franchise, it is time to learn about the franchisor’s expectations for operations, customer service, employee training, and overall performance. You will acquire all of this knowledge during your franchise company’s initial training sessions at their corporate office or a different training facility.

The time needed to complete your training will vary depending on your franchise. Make sure to keep all of the materials given to you during your training so you can reference them in the future. These include operations manuals, employee handbooks, and marketing guideline manuals.

3. Marketing assistance.

In today’s ever-changing marketing world, marketing a franchise is not what it used to be. Traditional strategies such as television commercials, radio advertisements, and outdoor billboards are still part of the marketing mix, but many others now join them. These include websites, custom apps, email marketing, social media marketing, public relations, and community events. All of this can be overwhelming and time-consuming, but you can expect to receive lots of marketing assistance from your franchisor.

Your franchisor will market the brand on either a national or regional level or perhaps both. Additionally, most franchise concepts provide their franchisees with pre-approved marketing materials, graphics, and promotional items. However, remember that you will typically not be free to develop your marketing and advertising materials, as your franchise has its own unique set of guidelines to maintain consistent brand messaging.

4. 92% success rate.

Here’s promising news if you want to buy a franchise: FranNet® reported that franchises have a two-year survival rate of 92%, much higher than that of independent startups. The high success rate of franchises can be attributed to established business models, strong brand awareness, excellent support systems, and ongoing training programs. As a franchise owner, you will also have access to growth capital solutions such as franchise financing and small business loans.

However, owning a franchise is not a surefire script for financial success. You need to maintain the quality standards set forth by your parent company and hire managers and employees who share in your commitment to outstanding customer service.

5. Opportunity to own multiple locations.

If your franchise is a big hit with the locals and has had a strong cash flow for an extended period, you might want to buy a franchise in a different location. Multi-unit franchising is not uncommon. FRANdata reported that multi-unit owners own 54% of all franchises in the United States.

Getting additional locations up and running can be relatively easy if you have the needed financial resources. In addition, you already have business relationships with equipment vendors, real estate professionals, and suppliers.

Balboa Capital, a Division of Ameris Bank, is not affiliated with nor endorses the U.S. Bureau of Labor Statistics, FranNet, or FRANdata. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.