A franchise doesn't come with a stamped guarantee of success;
what it offers is readily packaged potential. Not every franchise
will achieve success, but statistics reveal that they do give
business owners a powerful launch. In the US, there are 800,000
franchises operating today. Together, they contribute $1.3
trillion according to the US Census Bureau. The housing market
rebound and its resultant economic boom are expected to add clout
to a number of industries in franchising. This does not make the
franchise a flawless business model to run, however. Before
putting a trademark investment under your belt, assess the
advantages and disadvantages to avoid surprises later.
The core advantage a franchise offers is the strength of a
trademark that has already been developed thoroughly in the
marketplace. It takes between five and ten years to fully vamp up
a brand. Its inclusion in business operations tells consumers
what to expect from quality, service and speed of delivery.
Instant brand recognition is not something to take lightly. There
is a five step process involved in developing a brand. Through
the years, consumers gradually progress, first by gaining
knowledge of the product or service and its benefits and finally
that a particular trademark is preferable to others. This lengthy
procedure costs developers immense expense, skill and work. A
franchisee avoids the entire process whilst gaining all the
benefits. A start up with a heavy weight trademark is
To carry the trademark well, a franchise owner needs to give
consumers what they expect. This means quality, service and speed
of delivery need to be attained from the moment the doors open
for the first time. This is why franchisors charge ongoing fees
and put restrictions in place. This can be beneficial or
unfavorable, depending on perspective. Franchisees who want
guidance and training see the input as advantageous. Those who
prefer to have the freedom to create their own business models
and structures will see it as a disadvantage.
It may seem as if franchise operators are given a free ride.
This is far from the case and one of their first tasks is in
recognizing and purchasing a strong, steady brand. The success of
a franchise often depends on the strength and stability of the
franchisor. If the brand loses credibility as a result of poor
quality control or marketing errors, the franchise is unlikely to
get off lightly. Franchises also have contract terms that tie
unsuccessful franchisees down.
The benefits mentioned need to be paid for. Ongoing licensing,
fees, sales percentages and royalties are common features of a
franchise. Purchase at start up can be hefty as franchisees pay
for what they gain. Marketing is also carried out by the
franchisor, allowing the franchisee to run a true turnkey
operation where starting up is as simple as opening the doors.
Business owners passionate about developing their own brands may
want to control their own marketing. Franchise operators who
realize their weaknesses in this area might be grateful for the
reduced pressure and steadier learning curve marketing provision
gives them. Franchise operators are given their advertising on a
silver platter. Posters, brochures and additional marketing tools
are provided. The end result is a rapid break-even that's usually
a speedier path to profit with higher margins.
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