15 Advantages of franchising for prospective franchisees
As we begin the new year, 2022 looks to be promising for franchising and entrepreneurship. Whether due to the Great Resignation, or the desire to no longer work for someone else, many are taking control of their financial future, getting in the driver’s seat, and taking that next step toward business ownership. In doing so, the franchising model has great appeal.
According to the U.S. Census Bureau, 2021 saw about 50 percent more new businesses start in the United States than in any year in history. Unprecedented best describes the last two years and the unexpected strength of entrepreneurism and the growth of franchising.
So why is franchising a better investment in 2022 compared to starting an independent business? When considering if you want to get involved with a franchise, you need to weigh all the benefits of franchising but also all the things you may have to give up. A franchise gives you the benefit of being your own boss without the risk of starting your own independent business. As the franchisee, you are the third-party buyer who purchases the brand rights from the franchisor.
Let’s break down the advantages and disadvantages of franchising for prospective franchisees.
Advantages of Franchising for Prospective Franchisees
- Proven Playbook for Success
Franchising provides prospective business owners with a safety net versus starting a business from scratch. The risk of failure is greatly reduced because entrepreneurs are using a proven model with franchise training and support in place.
- Market-Tested Reliability
In some sense, the mistakes have already been made. The model is tested and tweaked by the time it’s presented to prospective franchisees. Products and services have been market-tested. You as the franchisee unlock the door to a turnkey business operation. Quicker ramp-up means you get the chance for profit-making sooner.
- Brand Recognition
Another strong advantage for franchisees is you are partnering with a recognized brand name and trademark. Brand recognition is a big benefit. If you start a business from scratch, you build your brand and customer base from the ground up, which is time-consuming. It’s advantageous to have name recognition carrying an established customer base. When you open the doors to your franchise location, people know the name, know the standards, and what to expect from your business. It springboards the building of your customer base.
4. Built-in Marketing Plans
Your franchisor has an established marketing plan in place. You benefit from any advertising and promotions by the franchisor.
- Training and Support
The franchisor gives you training to get you up to speed and comfortable opening your business. The franchise model clearly spells out operations and how to set up your business. You also benefit from industry leaders who will provide ongoing support as you navigate business ownership. For many franchises, there is no experience needed except for some business acumen. Training equips you for day-to-day ownership challenges.
- Guidance from Experts
Having industry leaders guiding you provides invaluable support, especially when problems arise.
- Territory Exclusivity
Most franchises offer exclusive rights to territory for each location, meaning the franchisor won't sell any other franchises in the same territory. This limits competition.
- Predictable Costs to Get Business Started
You’ll save time and money on design decisions and equipment purchases because everything you need is laid out by the franchisor and includes recommendations for suppliers.
- Easier Financing
Speaking of money, financing your business may be easier as a franchisee. Banks are more likely to lend money to buy a franchise with a good reputation. Your franchise brand will often open more doors for you from third-party lenders who see less risk with a franchisee versus a startup.
- Support from Family of Franchisees
You benefit from a strong network of other like-minded franchisees. This allows you to communicate and share ideas and receive support from other franchisees who are managing the same business and working through similar challenges.
- Purchasing Power
Brands often get bulk discounts for goods being distributed to many locations. You do not enjoy that advantage when you are a single location startup. Relationships with suppliers have already been established. Purchasing goods at a deep discount by buying in bulk keeps operating costs down, affecting your bottom line.
Potential Disadvantages of Franchising for Prospective Franchisees
- Occasional Surprises if You Don’t Read the Paperwork Carefully
There is a lot of paperwork that comes with franchising. By researching brands and studying their FDD (Franchise Disclosure Document), you, as the franchisee, go into this business opportunity with eyes wide open. Remember, you will pay the initial franchise fees and ongoing fees like marketing and royalties. All fees are clearly spelled out, and you should understand them all before signing the franchise agreement or contract.
- Disclosing Your Financial Background
The franchisor will ask you to share your financial situation. To ensure that the franchisee can afford this investment, the franchisor needs to know if they have a level of net worth and liquidity. Just as prospective franchisees want to know they’re investing with a good partner, the franchisor wants to know the same.
- Less Creative Control
The franchise agreement includes restrictions on how you can run the business. You’re the boss, but owning a franchise means you’re purchasing a license to use the brand’s trademarks and their proven playbook. These restrictions are put into place to maintain uniformity and optimize business, but they may feel limiting for franchisees who want to experiment with business processes and systems. Again, though, this is a caveat for the advantage of using a proven model.
- It’s a Commitment
In most franchises you will be signing a 10-year agreement. While you will most likely can sell your franchise, the sale will need to be approved by the franchisor in most cases.
The key to circumventing what some may see as tradeoffs to franchising is to find a franchise concept that aligns with your values and your personal and professional goals.
The MassageLuXe Advantage
As you can see, there are many advantages to franchising. The most important aspect of your business ownership opportunity is to choose the right franchise for you. You will look for a franchise in a growing industry, a franchise experiencing expansion, and one that aligns with your goals and lifestyle.
MassageLuXe is a massage franchise seeing burgeoning growth in a thriving industry. We are a fast-growing massage and spa franchise that provides luxurious treatments to clients across the country. MassageLuXe offers services to help clients relax, remove pain, and restore health.
The demand for spa franchise services is growing rapidly. According to the American Massage Therapy Association, the massage therapy industry is an $18 billion industry and continues to grow. Likewise, the health and wellness spas industry is currently valued at $19.6 billion with a 12 percent growth rate.
At MassageLuXe, we designed our model to encourage ongoing client participation and visits, create steadier sales cycles, and reduce administration and billing time. MassageLuXe franchisees have a quick ramp-up with early profit opportunities thanks to an expanding service line, product offerings, and top-notch grand opening marketing support.
To learn more about spa franchise opportunities with MassageLuXe, scroll down to fill out the contact form below.