BUSINESS
Why People Invest in Franchises by Chris Conner, President, Franchise Marketing Systems
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he entire franchise industry has gone through enormous change and evolved significantly with the "Amazon Effect" impacting nearly every industry and business on the planet. Many have even surmised that traditional retail is dead and the entire concept of a retail store is extinct. The reality is that the market segment has just changed and has been forced to evolve. Franchising is a huge and diverse industry—from fitness gyms like RockBox Fitness to QSR Food service models such as Grab N Go Tacos and specialty retail boutiques which create value at the store level like Ideal Feet. The
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franchise industry continues to grow and thrive with new ideas and breakthrough franchise brands. So why consider a franchise vs. just starting a business? A franchise essentially offers an entrepreneur a completed blueprint of a successful business based on a proven track-record. The Franchisor should have the experience and expertise to provide guidance and support to the new franchise owner to skip the learning curve and shorten the timeframe from opening to breaking even. The franchise terms and conditions are outlined in the franchise disclosure document or FDD and operational processes are documented in the Franchise
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Operations Manual. All of these documents provide a clear sense of what the Franchisee's responsibilities are to be an effective and efficient business owner while being compliant with the terms and conditions of the franchise. As a franchisee, the franchisor has already done all the heavy lifting so the new business owner doesn't have to. The franchisor developed the idea, documented the financial model and business plan, tested the business model, and defined the franchise marketing system through promoting and selling the product/services through advertising and marketing. A Franchisee can take advantage of these experiences and resources from the Franchisor and ultimately have a higher success rate than traditional business start ups. Perhaps one of the most difficult elements of building a business is establishing a professional and credible brand. A strong brand is what allows you as a business owner to marketing yourself, and create trust with consumers which ties in directly to your ability to create revenue. The barrier to entry is high for
