Why Own A Franchise

Why own a franchise instead of starting a business from scratch? After all, you may save yourself some money, because as a franchisee, you'll pay upfront and on-going franchise fees and royalties.

For some people, that's a realistic possibility. But according to the Small Business Administration, most people lack the managerial skill, knowledge, or financial resources it takes to open, build and sustain a successful business. In fact, according to various sources, approximately 65 percent of most businesses never make it to their fifth year of operation.

Franchising, however, can reduce the risk of business ownership dramatically. Various sources have continually, stated that since the 1970's, less than five percent of franchises are discontinued. No one really knows the exact figures because they are hard to determine. Franchisors don't want to reveal failures and in some cases, to avoid a store or business closure, the franchise company may re-purchase the business themselves. What we do know, however, is that franchising can reduce risks.

How does franchising reduce risk?

1. By providing tried and true formulas and methods for operating a business. This fact, alone, can shorten the learning curve for new franchise owners. The franchisor has already experienced the trial and error stages of beginning and running a business. The franchise owners become the beneficiary of this knowledge and experience.
   
2. By offering ongoing support and assistance to franchisees. Dedicated franchisors provide regular and ongoing training and supervision to their franchisees via newsletters, videotapes, seminars, in-field meetings, and telephone hot lines. They work closely with their franchisees to overcome both simple and complex business challenges.
   
3. Franchise ownership can mean "pooling" the resources of many other franchisees. This "cooperative" approach results in sharing the costs of buying inventory, supplies as well as advertising. Reduced expense also means a reduction of risk.