Five reasons to buy a franchise


happy businessman
If a business’s formative stages are often fraught by cash-flow worries, then acquiring a going concern could be characterised as buying yourself an income stream, while buying a franchise is more akin to buying a job.
 
While not for everyone – you may crave the challenge of building your own brand from scratch – there are many compelling advantages to buying an established independent business or joining a franchise network:
 
1.       Income from day one

An established business, assuming it’s a successful operation, will have a history of generating profit. Compare this to starting from scratch, with start-ups rarely breaking even until year two, three or even longer. Many franchisees also make money in year one. Franchisors often furnish them with a list of viable sales prospects and back them with a generously financed marketing campaign.
 
2.       Lower risk

Notwithstanding a turbulent trading history and your own incompatibility with the business in question, a going concern represents a comparatively low-risk investment. Although the failure rate for start-ups is often overstated, it’s widely acknowledged that more new businesses fail within five years than succeed. Join a well-established franchise network, meanwhile, and following its proven formula should see you prosper.
 
3.       Raising finance

There seems little prospect of credit conditions easing and banks remain risk-averse when it comes to untested propositions whose value is only hypothetically set out in a business plan. An established business, by contrast, can repay the loan from revenues projected from actual, historical profits. And franchises can also attract finance more readily, and on more favourable terms, on the basis that other franchisees have prospered adhering to the same proven formula.
 
4.       Training and consultation

Going into business alone, for all its rewards, can be a lonely adventure. In the formative stages, with scant capital to hire any staff, you may have to act as visionary, manager, accountant, administrator and salesperson all in one. 
 
Buy a business, however, and the seller may agree to remain in an advisory role for a transition period post-sale. Franchisees enjoy support indefinitely, first comprehensive training and then ongoing support from head office.
 
5.       Brand recognition

Not only do going concerns enjoy brand-name recognition in their marketplace, but they may already boast a roster of clients and/or repeat business. Some franchises are more reputable than others, of course, but choose your franchise wisely and your brand name will speak for itself when you’re in the hunt for custom.
It could take years to forge for a new business the kind of reputation you can otherwise acquire in six months’ negotiations if you buy an existing, reputable business or franchise.

About The Author

Adam Bannister Writer
Adam Bannister writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.