Opening A franchise is always a feasible option while considering a business venture. Legally, Franchise is a contract but let’s brush it aside and get into practical stuff.
A franchise business is a type of business venture where an entrepreneur or a group of them purchase the rights to build and operate a branch of an already running company. The person that has acquired the franchise, also known as the franchisee, has to follow strict guidelines on maintaining the standards of the parent company before initiating his franchise. A franchisee must run their outlet strictly in accordance with the requirements and guidelines dictated by the company or else may end up breaching the contract, which can result in the termination of the franchise contract.
Upon acquiring a franchise, the franchisee is required to use the brand name, logo and training from the parent company.
Acquiring and operating a franchise can be an extremely fruitful decision. Here are five advantages of starting a franchise.
As mentioned above, a franchisee can use the brand name, logo and marketing from the parent company upon acquiring a franchise. It is extremely beneficial as the franchisee can inherit a large audience, reputation and brand awareness.
The franchisee can attract customers using the already established brand image, making the process easier and more effective. Consumers are more likely to trust brands they’re already aware of hence the inherited brand image is a huge advantage.
A franchisee can also benefit from the parent company’s relations with public, authorities and suppliers.
Moreover, as the parent company would have laid the foundation of brand awareness, most of the work would already be done. High brand awareness around your franchise will lead to greater number of consumers visiting and trusting your franchise, which will result in soaring revenues and profits.
Along with branding benefits, a franchisee can also enjoy the marketing benefits from the parent company. The franchisee wouldn’t need to advertise his outlet himself as the parent company would already be doing it as a part of their larger mainstream marketing campaign. This will enable the franchisee to save huge sums, that would’ve been spent on advertising.
The parent company will be responsible for television adverts and social media publicity of the brand and the franchisee will automatically benefit from it.
The risk associated with opening a new business is reduced to a great extent in the case of franchises. As companies that offer franchises are already widely recognized and their products/services are trusted by consumers, the risk of failure would be extremely low for a franchisee.
A franchisee can save significant costs if they decide to acquire a franchise rather than going for a brand new venture. Costs including advertising, training, trademark registration and import duties are paid by the parent company in most cases, reducing the financial strain for a franchisee.
A franchisee would always inherit a framework that has been tested successfully. Franchises usually operate according to the standardized framework dictated by the parent company, reducing the risk of inefficiencies.
Starting a franchise can be extremely profitable if you’ve carefully analyzed the feasibility and other practical stuff. If you can manage to mobilize the audience in an effective manner, you can make significant profits.