I am fully confident in making the statement that there are many advantages to becoming a Franchisee in a good Franchise system. Of course, there are certain disadvantages as well, and each person must weigh their own dreams and desires in relation to what they want from their life.
To many, the advantages will far outweigh the drawbacks. That’s why we have seen the domination of Franchising as a business strategy in the global marketplace over the past two decades.
As the business strategy of Franchising evolves, it seems to become more and more attractive as time marches on. It’s both more attractive to Franchisors, and more attractive to Franchisees. That’s a reflection of the fact that Franchisors are simply getting better at it. The result is that Franchise systems are becoming more and more successful, and more Franchisees are fulfilling their dreams by joining good systems.
Reduced Risk of Failure
One of the significant benefits of becoming a Franchisee as opposed to starting your own business from scratch is the reduced risk of failure. The statistics are overwhelming when comparing the success rates of Franchisees versus stand-alone businesses. Depending on which study is being quoted, and which timeframe is being analyzed, the numbers are staggering in favor of Franchising. We see numbers like more than a 90% survival rate after five years for Franchisees versus in the range of 20% for stand-alone start-ups.
If we examine the reasons for the huge difference, it becomes apparent that there is great value in collaboration. First of all, a Franchisee has the Franchisor to rely upon for advice. The Franchisor will have faced the same issues as the Franchisee as they built the protocol business, and can pass along the wisdom that was earned through that process. That reason alone, means that the Franchisee doesn’t have to guess at solutions to problems or opportunities in the business
Not only does the Franchisee have the Franchisor to lean on for some sage advice based on actual experience, they can also call upon the other Franchisees in the system that are dealing with the same opportunities and issues. Annual and bi-annual meetings with all franchisees are where they can trade ideas and discuss best practices with their fellow Franchisees and are seen as one of the most valuable benefits for Franchisees.
The opportunity to discuss issues and opportunities with people that are dealing with the same items in their daily business lives is a tremendous benefit of a good Franchise system. In fact, the best systems will facilitate this process with events such as an Annual Conference, regional Franchisee meetings, and by using current technologies such as teleconferencing and regular webinars. All of these practices add to the value that a good Franchise can deliver, as well as helping to mitigate the risk of failure. A stand-alone business must find external sources for such training and coaching sessions and even then the programs will not include people that face the same day-to-day issues like a Franchise system.
About the author: Marc Camras, PhD is the founder and President of MVision Consulting LLC. which provides Coaching and Consulting services to Fortune 500 and 1000 companies, franchises, small independent businesses, non-profits, educational institutions, and non-governmental organizations in the U.S., Latin America, Asia, and the Middle East.