Why Invest In A Franchise?

With proper due diligence and planning, franchising can certainly be a lower-risk, high-reward route for both franchisor and franchisee.

Here are some advantages of buying a franchise:

Owning a business with an experienced business partner

Franchising is often described as a business format where you are 'in business for yourself, but not by yourself'. Franchise owners are able to own their own businesses, manage it daily and benefit from profitable trading without having to do any product development or national branding awareness. The franchisor has a dedicated marketing strategy and is responsible for all national marketing through the collective marketing fund, which ultimately benefits their entire franchise network. This could include television and radio advertisements, social media campaigns and billboards, which are often unaffordable for a standalone nonfranchised store. In addition, product development, for a restaurant, for instance, is managed by the franchisor. Various menu options and food technology will be tried and tested, and the exact profitability margins will be calculated on all products before they are released to the franchise network.

Supplier relationships and bulk buying power

Most successful franchises either have good relationships with external suppliers or own their suppliers through vertical integration. This ensures that franchisors are able to negotiate bulk purchase deals (based on their entire network) with their preferred suppliers to the benefit of their franchisees. These negotiations may include the additional benefits of a dedicated payment system, logistical arrangements and distribution of stock to the franchisee stores, which further assist franchisees.

Easier access to finance