Franchising: The Benefits it Brings to Small Business

By Craig Ridley and Katie Williams

Small Business Owners Love Franchise Systems

Franchising is gradually gaining ground in the business field and from my experience it can provide lots of benefits to small business owners.

According to a research done by British Franchise Association and National Westminster Bank, the franchise business today stands as a multibillion dollar industry and growing.  With the number of business franchising system growing like never before, small businesses especially are adopting franchising schemes to expand their business arena.

Small Business Franchise

The franchising industry is providing thousands of jobs to the unemployed by providing new employment opportunities.

Incredibly, statistics show that the franchising sector is larger than energy sector and as big as the armed forces! Since its recognition during 1970’s, the licensing of business systems through franchise arrangements has gained unbelievable momentum.

What Is A Franchise?

In a franchised business, a franchisor offers a fully developed business model along with assistance, systems and guidance in return for scheduled payments of stock purchases or license fees.

Many people consider franchising as a better option to opening a brand new business as it can reduce the risk of failure.

You don’t need to spend your valuable time in researching and developing a business plan or product as it is already developed by the franchisor. In this type of business both buyer (franchisee) and license holder (franchisor) can benefit.

There are just so many organisations such as Subway, McDonalds, Great Clips and Servpro that offer a license to franchise to competent parties. You can utilise their brand promotion strategies and reputation in the market to grow your part of their business group and you keep the profits.

Many franchisors offer full time management support and guidance to help make your business successful.

What Do I Get For My Money?

You can’t expect guaranteed returns because a franchise is still a business, and it needs your business skills to thrive and grow. But there is no doubt your risk factors are lowered by the fact you are using a proven business model with assistance from an experienced franchisor.

Every franchise is different but you should expect to pay at least a nominal amount of deposit to get the licence from the franchisor; in return for which you will pay them some share of your profits.

It is well suited for small and medium enterprises. SME’s don’t have to invest a huge amount of money in developing and researching a product of service. You don’t need to have relevant experience to run a franchise. Usually franchisors offer relevant training before starting a small business.

By purchasing a license you are effectively purchasing a recognized reputation, proven management, brand image and work practices. It is cheaper to purchase a license compared to opening a business from scratch and it can be easier to get a loan to buy a franchised business as most banks see the added security and can offer loans with a lower interest rate.

If you want to make your franchise business successful, you will still need to possess good management skills, good decision making skills, and access to working capital – just the same as traditional, non-franchised businesses.

If you are looking to start a small business for the first time, I would suggest that buying in to a franchise is a more simple and less risky way to do it. But you still need to develop your business skills to be successful


About the Guest Author: 
My name is Katie.  I am a tech writer from UK.  I am into Finance. At present I am focusing on ppi claims . Catch me @financeport


If you want some more information on what it takes to start up a successful business, whether it is franchised or not, check out my Kindle BookThe Entrepreneur’s Guide To A Small Business Startup


Kindle Book - Small Business Startup



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