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Benefits Of Purchasing A Franchise

There are numerous benefits to starting a franchise-based business as opposed to starting your own business. The following are some of the most important ones:

A proven business model

A franchise will often be acquired by a franchisee because the person trusts the proven business model. That can significantly lower the risk of the new business failing. The reason why the risk of failure is reduced is due to the fact that the business has been operating for many years already. It has already faced difficult situations, challenges, made mistakes, corrected those mistakes and gained invaluable experience.

When a franchise is acquired, the franchisee can expect to avoid many of the mistakes that have been made already by other franchisees and the franchisor. That adds more trust in the business and franchise.

Established Brand Authority

The franchised business has a well-known trademark already. From the very beginning, a franchisee gets a well-known franchise trademark. If it is popular within the franchisee’s market, it can help to attract customers without the franchisee making a lot of other efforts.

If instead of purchasing a franchise a person starts a business on her or his own, then that individual will have to create a new brand and promote it via advertising and marketing from scratch, so attracting customers will take a lot more money and time.


Trustworthy suppliers, advanced work methods, and developed technologies

After a new franchisee joins the franchise network, the person will very quickly adopt the technologies and knowledge that have developed and fine-tuned by the franchisor as well as other franchisees from the established franchise.

This allows a new franchisee to be able to avoid many of the common mistakes that are made when a business first starts, and gain access to developed work methods and proven suppliers. That significantly reduces the possibility of bankruptcy and possible damage that can occur because of business inexperience.

Also, it greatly decreases the amount of time that is needed to get the business launched and to achieve operational excellence.

Benefit from economies of scale

When franchisees join a franchise network they usually can benefit from economies of scale in various aspects including technological development, scientific research, marketing, as well as services and goods supply along with other essential business processes.

When an entrepreneur tries to develop a non-franchised business they will not have the same opportunities to receive the same cost to benefit ratio that would be received from becoming part of a franchise network.


The franchisor provides training and mentorship

When entrepreneurs are starting a business on their own, they are often faced with many difficulties since they don’t know what to do in various situations. They also don’t have the necessary process management and business experience. If possible, many entrepreneurs will be willing to receive the necessary knowledge from experienced business people and contact them to get advice on daily business issues.

With a franchise, the franchisor has a vested interest in the success of the franchisee. So franchisees are supported continuously by the franchisor. Various measures are used by franchisors to provide their franchisees with support, including direct help when the franchisee’s unit is being opened, giving advice on numerous business-related issues, offering continuous training, and providing access to comprehensive operations manuals that give detailed instructions on the management and organisation of business processes related to the franchise.

An easier way to obtain financing

It is quite common for entrepreneurs to face difficulties in attracting initial investments for starting their businesses. Although entrepreneurs might be able to obtain funds from investors or banks to start a business, it often isn’t that easy due to risk mitigation measures and strict requirements that are applied by creditors. They may be impossible to overcome for some aspiring entrepreneurs.

When it comes to acquiring a franchise, there are lower risks. The actual financial indicators like Max Funding that are available from other operating franchisees along with the reputation and background of the franchisor (rather than an unproven and abstract business plan) may convince investors or banks to grant financing with softer conditions.

Value for money

Most notably, not every benefit of purchasing a franchise that was discussed above comes automatically with buying any franchise. It is the franchisee’s primary responsibility to ensure that the specific franchisor and franchisee will provide a sufficient amount of value for the money that the franchisee will pay for the franchise. Also, prospective franchisees must pay close attention to potential pitfalls along with the benefits that are associated with purchasing a franchise.

Finance Expert, Writer, Entrepreneur

Tammy Richards is a passionate finance expert who is also a writer and business owner. With over 10 years of experience as a finance expert, Tammy wants to share her knowledge with her readers.

Tammy covers and simplifies a range of financial topics, including how start-ups can raise capital and how established businesses can grow successfully. It is clear that she is firmly on the side of Australian small business owners.
Tammy keeps her fingers on the pulse of financial updates. Through her articles, she regularly shares the latest tips and traps around financial products such as business loans and credit cards. She also delivers her information in an easily consumable and interesting way.

Tammy is a keen advocate of promoting financial literacy. She aims to educate small business owners by providing financial insights into common financial problems that businesses face.

“More than anything, I am enthusiastic about using my experience to help Australian small business owners to achieve their financial and business goals,” she says.

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