Advantages to being a franchisee


Being a franchise business owner offers many advantages, says Pramod Patel of commercial business brokerage Just Elementary, Inc. 

Proven business model to operate 

A great advantage to buying a franchise business is getting a proven business plan to execute. For established business franchises there has been time to refine the operation of the franchise locations to achieve a viable and profitable business model.  

Having a proven business model takes the guesswork out of having to create a concept from scratch or prove its viability.  This allows a business owner to focus on solely on captaining the ship, which is to execute the business plan to perfection.   
Instant brand recognition  

In cases where a Franchise has been established, there will be high brand recognition.  Having high brand recognition gives the

Customers that pass by or visit newly opened franchise business immediately know what to expect in terms of the services and products offered

franchisees an advantage over independent businesses that have to start from scratch to get the attention of customers.  

Customers that pass by or visit newly opened franchise business immediately know what to expect in terms of the services and products offered.  That is key to getting customers to open their wallet and spend their hard earned money.
Buying power with vendors

Making a business profitable not only involves generating revenue from customers, but it also involves controlling expenses.  

A major advantage of being a franchisee is situations where the Franchisor has negotiated with vendors and suppliers for discounted pricing due to the collective buying power of the entire base of franchisees.  Reducing the expense to vendors on supplies and goods leads to additional profit for the franchisee business owner.
Build out/construction plans

Opening the doors a franchise business to customers involves constructing the store front.  This involves plans, permits and money for the actual construction.  A good franchisor has plans and key staff in place to expedite the planning process which helps reduce the time it takes to open the doors for business, which helps reduce carrying costs for the project.  This means a franchisee can possibly get into business sooner, which means generating sales and profit sooner.
Network of fellow system franchisees to mastermind with  

Other franchisees that participate in the private message boards for franchisees are often a tremendous resource for each other.  Fellow franchisees can share insight into what has worked for them and why.  This, again, minimizes the amount of guess work which allows the franchisee business owner to focus on efficiently executing the business plan to maximize sales and profitability.

Having products or services stay current by the franchisor's brain trust

Products and services often evolve, which means businesses need to stay current with market trends.  This means market testing new products and services.  For an individual business to do this involves tremendous opportunity cost in time and money to market test products that may not pan out.  

This can be a real distraction for an independent business owner.   Having a Franchisor to do that testing for franchisees allows the franchisees to focus on running their business as successfully as possible.

Local advertising cooperatives

Many franchises also have local advertising cooperatives in place that create a separate budget for advertising in the local geographic region.  This is where regional franchisees band together to create marketing specifically designed to appeal to the local region.  

Additional local regional marketing allows for the message to be tailored to the local market, which benefits each participating store. 

Despite these advantages to being a franchisee, of course, you must still do due diligence when investigating businesses to buy to make sure you buy the right business for your situation. 

About The Author

Pramod Patel 
Pramod Patel, a California Association of Business Brokers Certified Business Broker, has been selling businesses since 2002. Pramod helps business owners find buyers when it is time to sell, and he helps business owners with acquiring businesses when they are in growth mode.