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What It's Like to Own a Franchise

Do you aspire to be a business owner, working for yourself and not for others?  There are many ways to start a business, but not all entrepreneur paths are equal.  It takes many businesses a long time to put the first dollar in the bank.

Franchising provides a fast track to entrepreneurial success.  Owning a franchise will mitigate much of the risk involved in starting a business from scratch.  This is because franchises include a proven business model, name recognition and a supplier network, which will cut out a lot of the work involved in starting a business from the ground up.

What is Franchising?

With franchising, you buy the right to use a business’s name, trademarks, branding and products.  You are leveraging the brand built by others.  Rather than having to build your own brand and develop your own product or service, you can use someone else’s.

You will have the freedom to manage the business as you see fit, however you will have to play by the franchisor’s rules.  In other words, you will own your business, but you will be operating it as if it were someone else’s business.

With most franchises, a portion of your revenue will go back to the franchisor, in the form of royalties.  It is a small price to pay for the education you will receive and the quick timeline in which you can expect to make profits.

Becoming a Franchisee

As a franchisee, you are going to get a lot of help from the franchisor.  The franchisor will have a program that will guide you to success.  You’ll have access to proven systems, processes and procedures.  You may need to take a franchisee course before you can own and operate the franchise.  This can take some time, but will be worth the effort.

You will need some capital to start a franchise.  Starting a new business can be quite expensive, although you may only need to pay a portion of that yourself.  The parent company may cover some of the startup costs on your behalf.

Is Owning a Franchise Right for You?

Owning a franchise is sort of like going to a business school, however instead of getting a degree, you will have a functional, cash-flowing business that you can keep or sell.  It’s an education that will pay you.

Whether you eventually sell your franchise to another aspiring entrepreneur, keep it and run it yourself, or pay a manager to handle the operations for you, owning a franchise is a good idea for many business owners.

Best Franchises to Own

One of the best things about owning a franchise is there are so many options available in multiple industries.

Restaurants come to mind to most people when think about franchising.  Other franchise categories include automotive services, business services, home products and services, children’s products and services, cleaning and maintenance services, education and training services, fitness and beauty, health and personal care, pet supplies and services, travel and lodging, sports and recreation and retail.

Finding the most suitable franchise for you requires research.  Considerations should include the level of interest that you have in the industry, the appeal to your demographic area, the reputation of the franchisor, the type of support system for the franchisees, the number of nationwide locations and your profit potential.

Most Profitable Franchises

While a well-established franchise that has a history of being profitable is a safe bet for most aspiring entrepreneurs, determining whether the profit potential is right for you is a subjective activity.  There are different paths to profitability.

Brick-and-mortar franchises will most likely require large start-up funds, to buy or rent a building and provide all of the equipment necessary to run the business.  It will take longer to generate a profit however, depending on the franchise, the financial reward could be substantial.

Service-based franchises require far less upfront investment.  A service-based franchise may only require a vehicle and some basic equipment.  This means that your chances of making a profit sooner will increase considerably.

The best way to determine a franchise’s profit potential is by analyzing Item 19 of the franchise disclosure document (FDD), which outlines the business’s financial performance.

Leveraging Others Success

Owning a franchise is a great option for first time business owners.  Franchising makes business ownership much more attainable and success much more likely.  It allows you to leverage the success of others, while building an asset that you own.

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