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39
Advantages, Challenges of Franchising
The Experience of the Franchiser
When an individual buys a franchise, he or she purchases the
years of experience and the proven operating system of the franchiser.
One franchisee expressed it this way, "What I have learned from the
franchiser was worth ten times what I paid for the franchise." In any
new business, much time and money are spent in trial and error, but a
proven franchise may eliminate many of those start-up problems al-
lowing one to open a franchise with little or no previous experience in
a given industry.
Training
A good franchiser will provide training for new franchisees. This
is usually done at the home office and at the franchisee's place of busi-
ness. Training should prepare new owners for all facets of the business.
In summary, franchising provides exceptional opportunities for
many people. While buying a franchise is not an absolute guarantee of
success, many of the pitfalls of individual ownership can be avoided.
Buying and Advertising
Most small-business owners cannot afford to buy inventory
products in bulk or do extensive advertising. The franchisee buys this
advantage when he or she buys the right to use the franchiser’s pur-
chasing power and advertising – most franchisers provide advertising
help and direction. Furthermore, as the number of franchisees in-
creases, so does public awareness of the franchise. This can be a tre-
mendous advertising advantage. Franchisees located near one another
can also advertise together, reducing costs.
Ongoing Advice, Research and Development
Franchisees need help throughout the term of their business en-
deavors and franchiser’s staff can give this needed help in all aspects
of the business. The franchiser can also provide ongoing research and
development so that new products and services will be made available
to franchisees.
40
Business Synergy
The word “synergy” refers to the idea that the sum of the whole
is greater than the separate parts. The principle can be applied to fran-
chising. Those who buy a franchise become part of a “family” where
all members work together for the good of the whole. Often, some of
the most effective ideas come from franchisees who in turn share their
ideas with the corporate office and with other franchisees.
Working within the System
People who have difficulty following directions or who dislike
working within a system will find franchising extremely frustrating.
Conformity to the franchiser’s operations manual is critical if consis-
tency among franchises is to be maintained. However, there are areas
such as marketing where a franchisee can be creative.
The Risk
While it is true that purchasing a franchise has less risk than
starting an independent business, there are still risks. Because the fran-
chisee owns the business, he or she, to a great extent, determines the
success of the venture. The franchiser may have a great programme
and a respected name, but in the final analysis much of the risk is in
the franchisee’s hands.
Working with the Franchiser
Buying a franchise can be closely compared to entering into a
marriage. Both are legally binding relationships that last for a long
time. The franchisee’s relationship with the franchiser will be ex-
tremely important. Franchisees should get to know the franchiser by
visiting corporate headquarters, talking to other franchisees, and read-
ing as much about the franchise as possible.
False Expectations
Some people buy a franchise expecting instant success, perhaps
because they see how well other franchisees have done. But that ac-
complishment did not come without great effort. Franchising, like any
other business, requires tremendous time, initiative and industry. Pro-
Advantages, Challenges of Franchising Business Synergy The Experience of the Franchiser The word “synergy” refers to the idea that the sum of the whole is greater than the separate parts. The principle can be applied to fran- When an individual buys a franchise, he or she purchases the chising. Those who buy a franchise become part of a “family” where years of experience and the proven operating system of the franchiser. all members work together for the good of the whole. Often, some of One franchisee expressed it this way, "What I have learned from the the most effective ideas come from franchisees who in turn share their franchiser was worth ten times what I paid for the franchise." In any ideas with the corporate office and with other franchisees. new business, much time and money are spent in trial and error, but a proven franchise may eliminate many of those start-up problems al- Working within the System lowing one to open a franchise with little or no previous experience in a given industry. People who have difficulty following directions or who dislike working within a system will find franchising extremely frustrating. Training Conformity to the franchiser’s operations manual is critical if consis- tency among franchises is to be maintained. However, there are areas A good franchiser will provide training for new franchisees. This such as marketing where a franchisee can be creative. is usually done at the home office and at the franchisee's place of busi- ness. Training should prepare new owners for all facets of the business. The Risk In summary, franchising provides exceptional opportunities for many people. While buying a franchise is not an absolute guarantee of While it is true that purchasing a franchise has less risk than success, many of the pitfalls of individual ownership can be avoided. starting an independent business, there are still risks. Because the fran- chisee owns the business, he or she, to a great extent, determines the Buying and Advertising success of the venture. The franchiser may have a great programme and a respected name, but in the final analysis much of the risk is in Most small-business owners cannot afford to buy inventory the franchisee’s hands. products in bulk or do extensive advertising. The franchisee buys this advantage when he or she buys the right to use the franchiser’s pur- Working with the Franchiser chasing power and advertising – most franchisers provide advertising help and direction. Furthermore, as the number of franchisees in- Buying a franchise can be closely compared to entering into a creases, so does public awareness of the franchise. This can be a tre- marriage. Both are legally binding relationships that last for a long mendous advertising advantage. Franchisees located near one another time. The franchisee’s relationship with the franchiser will be ex- can also advertise together, reducing costs. tremely important. Franchisees should get to know the franchiser by visiting corporate headquarters, talking to other franchisees, and read- Ongoing Advice, Research and Development ing as much about the franchise as possible. Franchisees need help throughout the term of their business en- False Expectations deavors and franchiser’s staff can give this needed help in all aspects of the business. The franchiser can also provide ongoing research and Some people buy a franchise expecting instant success, perhaps development so that new products and services will be made available because they see how well other franchisees have done. But that ac- to franchisees. complishment did not come without great effort. Franchising, like any other business, requires tremendous time, initiative and industry. Pro- 39 40
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