One of the major breakthroughs that COVID-19 made for entrepreneurship is that it opened doors for people to start their own businesses, either by establishing their own brands or through franchising.
Franchising, at its core, offers a proven path to business success, attracting many who seek low-risk, high-reward opportunities.
By combining an established brand presence with a proven business model, franchising helps reduce the risks and uncertainty associated with starting and running a new venture.
Here are the primary reasons why franchising is a smart choice for aspiring business owners.
1. Proven Business Model
Franchises operate on tried-and-tested systems. When you invest in a franchise, you gain access to a business model that has already succeeded. This eliminates the trial-and-error phase that new businesses typically face. The franchisor provides detailed operational guidelines, ensuring you know how to run the business effectively from day one.
For instance, if you’re looking for a coffee shop franchise, it already offers step-by-step instructions on brewing coffee, setting up the store, managing inventory, and training staff. These systems are in place and designed to replicate the success of existing franchise locations.
Hills & Valleys Cafe, for example, provides an operations manual for franchisees, covering everything from brewing every item on our menu to training staff on customer services. This manual lays the foundation for creating a consistent quality and flow of operations that help the new franchised store stand in its first weeks after opening.
Whereas if you’ll be starting your own coffee shop business, you’ll be investing months, if not years, in the research and development of beverages you’ll include as part of your menu.
2. Brand Recognition
One of the most significant advantages of franchising is the power of an established brand. Building a brand from scratch can take years, requiring extensive marketing efforts and consistent quality. With a franchise, you start with a brand that customers already know and trust.
For instance, opening a fast-food franchise like McDonald’s means customers are already familiar with the menu and quality. This instant recognition leads to faster customer acquisition and higher sales than an unknown startup.
When a brand is recognized, it’s surefire for sales, unlike startups that still have to increase their brand awareness, whether through offline or digital channels.
Our coffee shop franchise has been around for years, so our customers know exactly what we offer—the consistent quality of products we offer. This leverage helps our franchisees bank on, giving them a headstart over other competing coffee shops within their locations.
3. Training and Support
Franchisors provide comprehensive training and ongoing support.
New franchisees receive training in operations, marketing, and customer service. This ensures you have the knowledge and skills needed to succeed, even if you lack prior experience in the industry.
Support extends beyond the initial setup. Franchisors often assist with marketing campaigns, technology updates, and troubleshooting. This support network helps franchisees overcome challenges and stay competitive.
Pro Tip: Franchising training and support is the main difference between successful franchisors and mediocre ones.
Others would plainly sell features and items you’ll get from their franchise packages. For the most part, these are all basic. However, a good franchisor would delve deeply into franchising support – what, when, and how they would conduct audits, for example, and how they could market your stores through digital channels.
4. Lower Failure Rates
Franchises have a lower failure rate compared to independent businesses. This is due to the structured systems, established brand, and ongoing support franchisors offer. Research shows that franchise businesses are more likely to succeed, making them a safer investment. That’s also why many Filipinos now invest in coffee shop franchise.
For example, an independent restaurant might need help attracting customers in its first year, while a franchise benefits from established branding and marketing, ensuring a steady flow of customers from the start.
In fact, one out of ten businesses only survives in the first year. Starting your brand with your own concept requires not only making products available to the market but also solidifying trust and sustaining success in your first months of operations.
5. Economies of Scale
Franchises benefit from economies of scale. As part of a more extensive network, franchisees can access bulk-purchasing discounts for inventory, equipment, and raw materials. This reduces operational costs, increasing profitability.
For instance, a franchise chain may negotiate discounts with suppliers for all its locations. As a franchisee, you gain access to these lower costs, which would take a lot of work to achieve as an independent business owner.
Through economies of scale, franchised stores can benefit from lower costs and increased monthly profits.
I’ve seen this with the local franchise environment in the Philippines, where one franchisee would offer two or more franchise packages in different locations, getting more discounts from the franchisor. It’s only one good tip if you have significant savings to put into the franchise business.
6. Marketing Power
Franchisors manage large-scale marketing campaign that can benefit all franchisees. These campaigns include national or regional advertising, social media promotion, and digital marketing strategies.
As a franchisee, you contribute to the marketing fund and gain access to professional campaigns that drive customer traffic.
For example, a coffee shop franchise may run national TV commercials or social media ads. This increases brand awareness and attracts more customers to your location without needing individual marketing efforts.
Marketing drives more sales to each store. Having this in place with your franchisor’s in-house marketing team is a leverage you can take advantage of as it amplifies your franchised store.
Another thing most potential franchise owners miss is that whenever new franchise stores are added to the mix, they serve as a marketing platform to increase brand awareness.
7. Flexibility in Ownership
Franchising allows flexibility in business ownership. You can choose a franchise that matches your interests, skills, and financial goals. From food and retail to fitness and education, franchises are available in almost every industry.
For example, if you are passionate about fitness, you can invest in a gym franchise. If you love technology, choose a computer repair franchise. This flexibility makes franchising appealing to a wide range of entrepreneurs.
Pro Tip: Choose a franchise package that fits your interests or skills. You should be able to manage the franchise store with at least a basic understanding of the industry.
Your franchisor can help you understand more about the business and the industry.
8. Scalable Growth
Franchising offers opportunities for scalable growth. Once you successfully manage one franchise, you can expand by opening additional locations. Many franchisees build wealth by managing multiple units.
For instance, a franchisee who starts with one pizza restaurant may eventually own several locations in different cities. This scalability allows you to grow your income while leveraging the same proven systems.
The ability to scale your business opportunities is higher than starting your own brand. As you get more initial profits from early investment in franchising, you can invest it toward new franchise stores you want to set in.
9. Compliance and Legal Support
Starting a business involves navigating legal requirements and regulations. Franchisors provide guidance on compliance, ensuring franchisees meet local laws and industry standards. This reduces the risk of legal issues and allows you to focus on running the business.
For example, a retail franchise might offer support with licensing, permits, and health regulations. This saves time and ensures your business operates legally and smoothly.
At Hills & Valleys, we support our franchisees with the basic government permits and licenses to operate the franchise store. Our in-house team will help with any consultation regarding legal and compliance support.
10. Access to Financing
Franchises often have better access to financing. Because of their established track record, lenders view franchise businesses as lower-risk investments. Some franchisors also offer financing options or partnerships with financial institutions.
For instance, a franchisor may have agreements with banks to provide loans for franchisees. This makes securing funding for your initial investment and startup costs easier.
11. Built-In Network
Franchisees are part of a broader network of business owners. This community offers opportunities for collaboration, knowledge sharing, and mutual support. Regular franchise meetings and conferences provide platforms to learn from others’ experiences and exchange ideas.
For example, a restaurant franchise may host an annual conference where franchisees share tips on improving operations or boosting sales. This sense of community adds value to the franchising experience.
The best thing about meeting other franchisees is expanding your business network, which would open new opportunities for you to open other lines of ventures (besides your franchise businesses).
12. Predictable Revenue
Franchises often have predictable revenue streams due to established demand and customer loyalty. This predictability helps franchisees plan expenses and manage cash flow effectively.
For instance, a well-known coffee franchise may experience consistent daily sales, which provides stability and reduces the owner’s financial stress.
If you can predict revenue, you know how much initial monthly profits you can make. This helps build self-confidence as a business owner and enables a sustainable income, even if you have full-time or other businesses.
13. Adapting to Market Trends
Franchisors continuously innovate to keep up with market trends. This ensures the brand remains competitive and relevant. As a franchisee, you benefit from these innovations without investing time or resources in research and development.
For example, a food franchise might introduce plant-based menu options to cater to changing consumer preferences. Franchisees implement these updates, ensuring their business stays ahead of competitors.
Franchisors typically have an R&D (research and development) team that generates new insights for potential products and improves current ones on the menu.
14. Minimized Risk
Franchising minimizes risks associated with starting a business. Investing in an established brand with a proven model reduces the chances of failure. This makes franchising an attractive option for first-time entrepreneurs and seasoned investors alike.
For instance, an independent startup may face challenges in market penetration, while a franchise benefits from an existing customer base and operational framework.
15. Work-Life Balance
Many franchise models allow for better work-life balance. Some franchises offer semi-absentee ownership options, where managers handle day-to-day operations. This will enable owners to focus on strategic growth or other personal pursuits.
For example, a laundromat franchise may require minimal owner involvement, freeing up time for other activities while still generating income.
Franchising As A Smart Business Solution
Franchising is a smart business solution for those seeking a proven path to success. With its established systems, brand recognition, and ongoing support, franchising reduces the risks of starting a business. Whether you are a first-time entrepreneur or an experienced investor, franchising offers growth, stability, and profitability opportunities.
By choosing the right franchise and following the provided systems, you can achieve business success while enjoying the benefits of an established network and brand. Franchising is not just an investment but a strategic move toward long-term growth and financial independence.
