What It Means To Own a Franchise
Ever feel that your business should be part of something bigger, something that will give you support and increased name recognition? That could be just what you need to move on to the next level. And that and more is what buying a franchise can do for you.
What a Franchise Is
You’ve probably heard or seen the word “franchise” countless times – and that’s just counting McDonald’s commercials, where “franchises are individually owned and operated”. And that’s actually a great example of how franchising works.
Product Distribution Franchising
There are two general types of franchising. The more traditional type is “product distribution” franchising. This is actually more common. In general, it means a business sells a particular brand of product. A great example of this is a new-car dealership. The business model of each franchise belongs to that site. But they contract with a manufacturer to sell a particular product exclusively (in some cases, it may not be 100% exclusive relationship, but is at least semi-exclusive). They may also provide follow-up service afterward.
Another example is gas stations – they contract to provide a particular brand but they run the station as they please. However, convenience store chains may fit into the business format franchising model.
Business Format Franchising
Business-format franchising might be the first thing that pops into your head when you think of franchising, though. There are many things in common. A company – let’s use McDonald’s as an example – leases the rights to use their brand image. The Golden Arches, the color scheme, the items on the menu – these are all set by the corporation.
Besides all this, things like site selection, training manuals and much more are controlled by the franchisor. It’s really about the entire way of doing business! That means less work and more support for the franchisee, although it also gives less freedom about choices.
In both cases, the franchisee gains the benefit of working with an established and respected brand. No longer are your on your own trying to establish yourself. There’s something bigger that’s easily recognizable that you’re connected with. Particularly in the case of business format franchising, you have a huge amount of support to guide you through the whole process.
Some Benefits of Franchising
You probably thought we dealt with the benefits already, right? But even though name recognition is a huge part of the benefits, it’s not the only one! And yes, it’s a legal, contractual relationship – but don’t limit your thoughts to that either!
Among the other benefits you get is the network of fellow franchisees and corporate personnel you work with. You develop a great field of resources that you can depend on. Around 80% of franchisees appreciate the relationship and honesty of the franchisor and say they would do it all over again. That’s according to a 2014 study by Franchise Business Review.
It’s obvious why the franchisor provides such great support. You’re going to be representing their brand with your business. They want you to succeed and not to tarnish their reputation. So they do everything they can to help your business work well.
Why would you need these relationships? Quite simply, they can make life a lot easier. Yes, a lot of people like the independence of doing things on their own. Or maybe they think they’d feel restricted being part of something else. But that can become almost like reinventing the wheel.
“Following the rules” of being a franchisee might seem restrictive, but it can also be liberating. There’s so much less you have to worry about. You don’t have to devise new strategies or handle everything yourself; it’s already done for you.
Another positive of buying a franchise is that it’s often easier to get financing. Many lending institutions will appreciate that you’re becoming part of something that’s already well-established. That makes them more likely to believe in your possibilities of success – and their likelihood to get their money back.
How Does It Work?
By now you’re probably asking yourself, “What’s the catch?” There has to be more to it right? And yes, of course there is.
Becoming a franchise means entering into a contract with the broader company. You lease the rights to use their name and products. You also pay a percentage of your profits. These help cover “overhead” like all the training and branding that you benefit from. It includes costs like advertising as well as royalties for using the name and logo. So basically it boils down to an upfront payment to “buy in” plus ongoing costs.
You also don’t have total control of your business when you run a franchise. Even though running a franchise does make you a business owner, you’re also bound by contract to do things a certain way. That can vary depending on the type of franchise arrangement, but some elements will definitely have to conform to broader brand expectations.
If you’re looking to buy a franchise, the parent company will also want to know about you and what you can bring to their name. You’ll probably be asked to fill out a survey and maybe have some kind of interview. It’s important for both you and them to know you’re a good fit.
If the two parties come to an agreement, then you can get started. In many cases, franchisors will even help with site selection and other parts of getting off the ground. One key, of course, is making sure that you’re not competing with other franchisees under the same company.
So Is a Franchise Right for You?
Becoming a franchisee can be a great decision for the right person. If you’re looking to be in business for yourself but still have a great support system, it makes a great choice. You’ll need to have an entrepreneurial spirit, but also a collaborative one. Both of these are key aspects to thriving in a franchisor-franchisee relationship.
If you’re looking to move beyond just a small local business that you have to build entirely from the ground up, a franchise can be a perfect choice. You can still be a business owner. But you can also depend on a support system and a way of running the business that’s tried and true.
Ready to make the jump? Start checking out franchising opportunities in the field you’re interested in. Be ready to take the next step to fulfill your dream of owning and growing your business with a fantastic network behind you!
Patterned Concrete offers franchising opportunities across North America. If you are a cement contractor and would like to have the trust name of Patterned Concrete as part of your business, contact us today! We’re looking for hard-working contractors who are true entrepreneurs, and who know they can benefit from our trademarked tools, family-like environment and desire to see you succeed.