Advantages and challenges of franchising.

The Advantages

Advantage #1--The Experience of the Franchisor

When an individual buys a franchise, he purchases the years of experience and the proven methods of the franchise system, also known as the franchisor. One franchisee expressed it this way: "What I have learned from the franchisor was worth ten times what I paid for the franchise." In any new business, much time and money are spent in trial and error. A proven franchise may eliminate many of the start-up problems. This reason permits one to open a franchise business with little or no previous experience in a given industry.

Advantage #2--Training

A franchise system will provide training for the new franchisee. This is usually done at the home office and at the franchisee's place of business. This training should prepare the new owner in all facets of the business.

Advantage #3--Buying and Advertising

Most small-business people cannot afford to inventory products in bulk or do extensive advertising. The franchisee buys this advantage when he or she purchases the right to use the franchise system's purchasing power and advertising. Most systems provide advertising help and direction. Furthermore, as the number of franchisees increases, so does public awareness of the franchise. This can be a tremendous advertising advantage. Also, franchisees that are located near one another can advertise together, thus reducing costs.

Advantage #4--Ongoing Advice, Research and Development

Franchisees need assistance throughout the term of their business endeavors. The franchise system's staff of experts can give this needed help in all aspects of the business. The franchisor is also in a position to provide on-going research and development. Thus, new products and services will be brought to the attention of the franchisee.

Advantage #5--Business Synergy

The word "synergy" refers to the idea that the sum of the whole is greater than the separate parts. This principle can be applied to franchising. Those who buy a franchise become part of a "family" where all members work together for the good of the whole. Indeed, there can be support and assistance in a franchise organization that assists everyone in becoming successful. Often, some of the most effective ideas come from franchisees who in turn share their ideas with the corporate office and with other franchisees.