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When You Buy a Franchise You Buy a Proven System


Franchise System vs. Small Business

When an entrepreneur invests in a franchise, he or she is much more likely to obtain a solid proven system than you are from an ordinary small business partly because a franchise is a larger company that is overseeing many smaller operations. The franchise company has typically developed a successful structure with the bugs worked out through trial and error over a period of time.

Research demonstrates that overall franchises have an approximate success rate of over 90% as compared to small businesses started from scratch at only about a 15% success rate.

What is Provided by the Franchise

A successful franchisor provides its franchisees with a business model that has been proven to work. The franchisors have typically spent a great deal of time and energy developing the most complete overall system to pass along to their franchisees. The better their system, the more success their franchisees and they will ultimately achieve as well.

The complete detailed system on how to successfully operate the business is passed to the franchisee including training, continuous support, and a reference manual.

As part of the system, franchise operators usually spend a great deal of time analyzing methods and narrowing down the best combinations of products and services to market based on need. Demographics are also evaluated, determining the most lucrative locations for the franchises.

Marketing plans for pre-opening as well as ongoing operations are also components of the overall system that is presented to new franchisees.

How to Investigate a Franchise's System

First, before investing in a particular franchise, it is important to research the operation as thoroughly as possible. Find out how long the franchise has been in existence. If the franchise has been in operation greater than 10 years, it is more likely to have made it through several stages of growth; therefore having a more reliable system in place.

Also, obtain firsthand information by speaking with other franchisees within the organization to determine how the franchise has worked out for them. Find out if they have achieved the success that they expected.

By and large, investing in a franchise and its proven system offers entrepreneurs great opportunity for success without going through the many painstaking steps of establishing a brand new business. With the franchise they can concentrate on getting to know their customers and bringing in new business.

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