The franchise industry is booming. There are more franchisors than ever before, and various sources indicate that there are currently well over 750,000 franchised outlets in the United States. So, why is this the case? Why do so many people choose to buy a franchise instead of starting an independent business? National franchisee lawyer Jeffrey M. Goldstein shares his thoughts.
7 Reasons Why Entrepreneurs Buy Franchises
Different people buy franchises for different reasons—and to be clear, buying a franchise isn’t right for everyone. With this in mind, here are seven of the most common reasons why people choose to buy a franchise rather than start an independent business:
1. Brand Recognition
Brand recognition is perhaps the single greatest factor in prospective franchisees’ buying decisions. Rather than working to build a brand from scratch, franchisees can benefit immediately from the goodwill their franchisors (and other franchisees) have cultivated.
2. The System
Franchisors offer (or should offer) a business system that has proven to work in the past. This allows franchisees to hit the ground running, and it eliminates much of the trial and error involved in building an independent business.
Franchisors also offer (or should offer) operational support for their franchisees. Many first-time business owners like knowing that they can call or email for help if they run into issues. In practice, however, some franchisors offer significantly more support than others.
Prospective franchisees have access to financing options that aren’t available to entrepreneurs who are seeking to start a business from scratch. If you (like most people) will need to finance your business, this could be a significant factor in your decision-making as well.
5. Economies of Scale
Franchisees often enjoy reduced supplier costs due to economies of scale. Good franchisors will negotiate purchasing arrangements with trusted suppliers and then pass the discounts on to their franchisees.
6. Franchisee Network
Many franchise systems have strong franchisee networks. By joining a network of like-minded business owners who are facing the same issues and concerns, new franchisees can get additional support—and many new franchisees find this additional support extremely valuable.
7. Chances of Success
If you look around online, you will find various sources stating that franchises have a higher success rate (and often a much higher success rate) than independent businesses. While these statistics often don’t tell the whole story, it is true that some franchised brands have large numbers of long-term franchisees. Of course, as a franchisee your success ultimately depends on you, and this starts with the decision you make regarding which franchise opportunity to pursue.
Request a Free Consultation with Franchisee Lawyer Jeffrey M. Goldstein
Goldstein Law Firm is a national franchise law firm that exclusively represents franchisees. We provide four tiers of fixed-fee franchise business review programs for new franchise buyers. To discuss your options with franchisee lawyer Jeffrey M. Goldstein in confidence, please call 202-293-3947 or request a free initial consultation online today.