Wondering exactly what entrepreneurs who want to open a franchise in 2022 should know about? You will find out that there are many entrepreneurs who want to open a franchise but who do not have enough capital to start-up the business. In fact, it is often a lot less expensive to purchase an existing franchise than it is to start a new one from the scratch.
In this guide you’ll learn:
How much it costs to open a franchise
What it takes to run a successful franchise
The traits of a good franchisor
And lots more…
So if you have plans of opening a franchise in 2021, you will definitely love this guide. Let’s right into it!
What is a Franchise?
We all dream to own our own business one day. In fact, a recent survey conducted by the United Parcel Service (UPS) shows that:
Nearly two-thirds of Americans dream of starting their own small business someday.
The survey also revealed that most hesitate to do so out of the fear of failure. And this has been a major concern for many.
There’s one specific type of business model that has come to solve this problem, to give young entrepreneurs a leg up on their own success, and that is franchising!
A franchise is an authorization granted by a government or another company to an individual or group that enables them to carry out specified commercial activities like acting as an agent for a company’s product.
How long does it take to franchise a business?
When deciding whether you should franchise your business or not, one major consideration is how long the entire process will take. The length of time varies depending on factors that could be unique to your business or industry.
While some experts estimate that it could take between 90 to 120 days to complete the franchising process, Anders suggests that time frame isn’t always accurate.
What are the benefits of franchising your business?
By making your company’s processes, likeness and other facets of its operation available for franchising, you can reap the rewards without having to manage everything.
“When you franchise your business, you’re able to expand to areas that would have been more challenging to grow in as a company, and you’re able to do it faster,” Anders said. “This growth helps spread your brand to new corners of the country, helping you to build a reputation and recognition.”
Franchises are like the most common business models!
We witness them in our everyday life. It’s almost impossible to drive more than a few blocks in most cities without seeing a franchise business.
Some common franchise business models you are conversant with are McDonald’s, UPS, Subway, H&R Block, etc.
Franchise business opportunities in the United States are available across a wide variety of industries.
There are over 733,000 franchise businesses in the United States contributing over $800billion to the economy and employing nearly 8million people.
Franchising is indeed a booming industry and something that entrepreneurs should consider diving into.
Why Open a Franchise?
Here are a few more reasons to encourage entrepreneurs to open a franchise in 2022 to do so quickly
1. Establishing a good reputation
Franchising helps you to build a good reputation quickly as a startup business.
Entrepreneurs have the advantage of joining a well-known business that has already built reliability with customers.
Customers will recognize the well-known business identity such as their brand logo which represents decades of trusted reputation.
2. Built-in Assets
Opening a franchise business means having already built-in assets and resources to set you up for success. Franchise businesses can take advantage of advertising and marketing efforts while also doing their own promotion within their community.
Most companies offer education and training for business franchises to learn the processes and skills needed to successfully run a business.
So, for all the entrepreneurs who are planning to open a franchise, you’re advised to look for a company that offers a mix of online and off/in-person intensive training to teach you everything from financials to marketing.
3. Networking (What Entrepreneurs Who Want to Open)
With franchising, you are not alone when starting your own business.
You have the ability to connect and network with other business franchises to learn more about their experiences in the business.
So, if you wish to open a franchise, it’s best to consider one that offers meetings or annual conventions where different business franchises meet regularly to have face-to-face interactions.
4. Ongoing Innovative Ideas and Product Pipeline
As an entrepreneur who wants to open a franchise, you have the opportunity of leveraging from ongoing ideas and products.
Most business franchises have a team dedicated to the development of new products and services to the business.
So you’d not be bothered with the product creation process – your only duty is to learn more about the new products and how to sell them to customers.
American Association of Franchisees and Dealers offers eight criteria for evaluating a potential franchise’s profitability.
Eight criteria for evaluating a potential franchise’s profitability
- A well-known, well-loved brand name: One of the main reasons to open a franchise is so you can use the brand’s earned reputation. Don’t go for a franchise that’s just starting out.
- Strong business model and marketing strategy: Entrepreneurs who want to open a franchise should agree with how their franchisor plans to support and promote the new business. They use social media, paid placements, and public relations outreach to support the new location in its launch.
- Healthy franchisee relationships: Get in touch with other franchise owners from this company, either by checking the AAFD chapter list or simply searching the internet.
- High-quality products or services: Avoid companies that focus on sales without considering long-term customer relationships built on value.
- Franchising is the company’s main distribution channel: Watch out for franchisors who sell their products in retail or discount outlets.
- An established industry: Be sure the franchise you’re considering is in a space with plenty of consumer demand.
- Strong sales and revenue data. Only trust a franchisor who can show you a proven financial history and return-on-investment for other units.
- Support of fair and equitable franchising standards. Research what the franchisor has said publicly about the franchising model
What Entrepreneurs Who Want to Open a Franchise in 2022 Should Know
If you’re an entrepreneur, and you’re planning to open a franchise, below are some of the things you must consider:
1. How much it costs (What Entrepreneurs Who Want to Open)
This includes things like the purchase costs, your opening inventory and the amount of working capital needed to break even.
The cost of opening a business franchise varies by both the niche you choose to dive into and the franchise brand you choose within that niche. Start-up costs for a business franchise range from about $50,000 to about $200,000.
Understanding your business franchise start-up cost is crucial, as no entrepreneur wants to run out of money while on the verge of success.
2. What are you passionate about? – Not necessarily what you are good at
When opening a business franchise, you are not going to be doing all the work yourself.
So, if you’re really passionate about smoothies, but you’re not an expert at preparing them, you don’t have to worry – you can hire people to get it done for you.
This also goes for selling the products and making deliveries.
3. What kind of support will your franchisor provide? (What Entrepreneurs Who Want to Open)
One of the hardest things to do when starting a new business is asking for help when things are not going right.
But if you are well aware of the kind of support your franchisor is willing to provide, the process will be much easier.
It’s also really important to get to know what your franchisor is really like – because not all franchisors are the same!
Research about things like:
How long has the company been in business
What’s the company’s average rate of success
And how long do other business franchises stay on average with the business.
The more you know about your franchisor, the better informed your decisions would be.
4. How much time must you invest in the franchise business?
For entrepreneurs who want to build a franchise business in 2021, it’s really important you understand what’s involved.
There are franchise businesses that require you to work especially hard at a certain period of the year.
5. What it takes to run a successful franchise (What Entrepreneurs Who Want to Open)
When opening a franchise, it’s always good to speak to other franchisees and not necessarily the most successful ones. Ask about things like:
Key success factors they’ve discovered in their franchise business journey.
Challenges they’ve experienced and how they overcame it.
How long it takes to start making a profit.
If they were to start the business all over again, knowing what they know now, what would they do differently?
Factors that could lead to the failure of a franchise.
It’s always great to learn from your mistakes, but it’s even better to learn from others so you don’t repeat their mistakes.
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