Ask any entrepreneur and they’ll tell you that starting a business from scratch isn’t for the faint of heart. According to The Bureau of Labor Statistics, about 20% of independent businesses close after two years. By contrast, 92% of franchisees were still in business at the two-year mark.
To be able to own your own business with much less risk of failure is attractive to any entrepreneur, but why is there a gap between the success of franchises vs. new business ventures?
It’s not surprising that franchisees have a greater chance of success because while the business is new for them, it’s not a new business. Franchises, even emerging ones, have locations that are already thriving. The startup kinks were worked out by the franchisor and now the business has established operational systems. These procedures are what makes the brand attractive to a franchisee. Instead of creating the wheel from scratch, they are simply recreating a wheel that already works. The most successful franchisees are those that continue to pull that lever and replicate the systems.
Depending on the franchise you purchase, the brand may already have strong local, regional or national recognition. This means the franchisee doesn’t have to sell customers on a new restaurant or new store. Even in a new location, there is brand awareness already. Even new brands can enjoy this brand recognition when they’re owned by a celebrity like Duff’s CakeMix, JARS and Taffer’s Tavern. The power of the celebrity’s name and their media reach will drive coverage and customer interest in a new outlet of their brand. This means a franchisee will spend less on initial marketing and open with a built-in customer base.
One of the hardest things for an entrepreneur is that it’s hard to go it alone. Not only do you need to wear a lot of hats, but you also don’t have anyone to brainstorm with, and you have to create your own network of vendors. With a franchise you get a strong supply chain, which is critical in today’s post-pandemic economy. Franchisees also get business support from the franchisor and brainstorming and sharing of best practices with fellow franchisees.
Marketing and Advertising
As part of a franchise a franchisee will benefit from the marketing and advertising the franchisor does on behalf of the brand. Additionally, brands will also invest marketing dollars to help a franchisee launch new markets and new stores.
If you’re dreaming of being your own boss, contact Fransmart today to learn how franchising can help you build the business you’ve always wanted, with less risk than you imagined.