10 reasons why you should invest in a franchise

Franchising in Australia is increasingly an economic powerhouse for investors, ticking a lot of boxes for investors and potential business owners.

1. It’s a booming sector

Franchising is on a roll. According to the Asia-Pacific Centre for Franchising Excellence, the number of franchises operating in Australia has increased 15 percent in the last two years and stands at about 1180 businesses. This is a $131 billion industry and it’s still growing.

2. Risk is minimised

The rigours of establishing a business from scratch are considerable and in a franchise there is a wealth of experience to draw on that can ease the process.

Of course there is never any guarantee of success but the presence of tried and tested systems, a brand, and experience in trading creates something of a shortcut in establishing a business for franchisees.

3. Brand power

What a franchise network offers the new franchisee is the chance to start off with knowledge and experience at their fingertips.

What could be better than starting out in business with a brand that customers already recognise and love?

4. A competitive advantage

Once the business is up and running, a franchisee can then turn to the depth of experience on hand in the network to gain competitive advantage. The franchisor doesn’t have the answer to everything – getting practical advice, and a reality check, from others in the frontline is invaluable for a franchisee.

5. Focus on building your business

Although a franchisee’s business is their own responsibility, most franchisors are engaged in helping franchisees achieve their own goals, and through business development or field managers are able to offer advice where needed about ways to improve sales, cut costs and increase profit.

6. Access to finance

Getting a loan from a bank is harder than it used to be. But the existence of a tried and tested business, good operating systems, a visible brand and franchisor experience, can still be appealing to any lender.

A banker’s understanding of what the business is about is developed over years through a relationship with the franchisor and that cannot be replicated by a start-up.

7. Access to buying power

What advantage does a chain of stores or a national service operator have over an independent? Buying power. And that’s something shared by a franchise system.

8. Access to innovation

Innovation, research and investment in technology are all vital elements to a business that a good franchisor will undertake, with the end goal the boosting of a franchisee’s business through greater efficiencies, swifter responses, improved communications, up-to-date analysis, and a competitive edge.

9. Opportunity to expand

A franchise network can be the landscape in which to set out on the journey to multi-unit ownership; many franchise systems see the value in successful franchisees expanding their reach and building the brand at the same time.

10. Rules and regulations

Beyond the legal constraints that inform any business behaviour, for franchisees there is a regulatory code that governs the franchise sector, and fundamental to this is the relationship between franchisor and franchisee.

Originally published by, Sarah Stowe on Franchise Business (franchisebusiness.com.au) , on 7 December, 2015

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