Tuesday, 1 November 2022
5 Reasons Why a Franchise Could be the Best Business Deal You’ll Make
Have you been looking for your next business opportunity but can’t decide where to invest? Perhaps you’re interested in the idea of franchising but not sure if it’s right for you.
Here we’ll cover the top six reasons to buy into a franchised business and why it might just be your perfect next move.
Basics of Franchise Ownership
An estimated 590 franchise brands are operating in New Zealand, as of 2021, with a turnover of 58.5 billion. With a population of 5 million, this makes New Zealand one of the most franchised countries on a per capita basis.
If you are brand new to this type of ownership structure, here are some of the basics you will need to understand early on.
– Franchising aims to ‘dupe the original’, so customers know to expect the same quality and results in whichever location they find themselves in. Good if you like a clear roadmap to success, but not so great if you prefer having complete autonomy.
– Franchising works by a company licensing their business plan and branding to you, for a fee. You work for yourself and run your own business, but you will not have a stake in the company’s intellectual property.
– To own a franchise, you needn’t have owned a business before but having some business management experience is important. Been working as a store manager for the past five years? You could be the perfect candidate.
– To succeed you’ll need drive, persistence, a well-developed work ethic, basic business skills, and great communication skills.
The Top Five Reasons to Buy into a Franchise
#1 You Want Your Path to Success Already Paved
Because franchises are businesses that have been market tested and proven financially viable, statistically, you are more likely to succeed by buying into a franchise than entering into a start-up.
One of the top reasons why start-ups fail is because the idea wasn’t suitable for the market they were launching in. Eliminate this risk as a business owner by buying into a business that already knows its customer and can use years of data to pinpoint what new locations will be a success.
Successful franchise businesses have already gone through the teething issues that come with launching a new product or service. Hungry for revenue from the moment you open up shop? Maybe a franchise is right for you.
#2 You Want to do it All. Just Not All Alone
Know you have the skills for ownership but also know you might need a helping hand?
One benefit of owning a franchised business is that you get support from a head office that has a mutual benefit in your success.
Great franchise brands will all have one thing in common – an excellent onboarding training program. You will be trained on sales generation, how to maintain brand consistency, and how to motivate a team as well on-site training.
Once you complete your training programme the support doesn’t stop. You’ll be in regular contact throughout your journey via self-guided learning modules and in-person workshops.
#3 You Don’t Know Anything About Marketing or Advertising
Understand conversion and engagement rates about as much as the Game of Thrones plotline?
As a franchise business owner, if you choose to invest in a larger brand like for example, Burger Fuel, you could benefit from nationwide campaigns. Consider the amount of fast food T.V. commercials you see each night, and radio ads you hear during your commute each morning. There’ll be a small, franchised site benefiting from this exposure at no direct expense to them.
To a lesser extent, smaller franchise brands will still be able to provide brand material such a logos and templates if you are wanting to run your own promotion.
What could this mean for you? You can hold off on that marketing MBA and concentrate solely on sales.
#4 You Want a Business with Instant Brand Recognition
Not interested in the start-up game and taking on all that risk? If you do your research and buy into the right type of franchise business for you, you’ll get to enjoy the perks of opening a new store knowing that the customers will recognise the brand from the offset.
Leverage the name recognition of an already established brand and take away the years of hassle and hard work that go into building a positive brand reputation from scratch. If you don’t fancy the long game, this could be the solution for you.
#5 You Don’t Have a Large Amount of Capital
The total median start-up cost for a new franchise site was $150 000, according to the Franchise Association of New Zealand. Contrary to this though, franchises aren’t always the priciest option and there are multiple payment options to suit different budgets. For example, the franchises we work with at Iridium Partners range from $50,000 to over $2 million depending on the size and scale of the business.
When it comes to raising capital via a bank loan, franchisees also have the upper hand compared to other new business loans. Banks are more likely to approve business loans when it is for a reputable franchised operation, rather than a start-up with no measured results.
Get in touch with us directly to find out how we can help.