Five reasons why franchising works

By Sarah Stowe | 10 May 2017 View comments

Inside Franchise Business: why does franchising work as a business model?If you have a dream of owning a business and becoming the master of your own destiny and lifestyle, then investing in a franchise could well be the perfect fit.

Jean-Franois CarrŽ, master franchisor, Franck Provost Australia, explains why…

1. A strong brand with a track record of success = risk avoidance

A good franchise has a proven business model that has been refined and optimised to produce successful results. Because a lot of the groundwork has already been done, the ‘success rate’ is much higher with a franchise than it is with starting a brand new business from the ground up.

Customers will already be familiar with the brand you are investing in, so know what to expect, thanks to the reputation of the franchise group that has been built regionally, nationally, or in some cases, around the globe.

Potential franchisees have access to a great deal of information via required disclosures throughout the due diligence period, so you can paint a fairly solid picture of what your future business will look like before you make any final decisions.

2. Support and education

A new business start-up has to outsource many services in order to support the smooth running of its daily operation and future growth. With a franchise organisation, most of these are available at the touch of your fingertips. Structured education programs, reference tools and manuals, plus experts in a multitude of divisions including marketing, accounting, customer service and human resources, provide ongoing support and education to deal with whatever is required for the daily operation of your business and address any problems or issues when they arise.

As a business owner these elements can be tailored to suit your unique requirements, allowing franchisees to focus their attention on running their business while enjoying life outside it too.

3. Marketing assistance

Most small business operators understand that marketing is vital for the ongoing success of their enterprise, however often lack time and expertise to implement the necessary strategies required. Franchise companies invest significantly into branding and marketing, so are able to provide an array of tools and strategies to promote your business and attract and retain customers from the moment you open your doors.

4. The power of negotiation

Being part of a larger group gives you significantly more purchasing power than if you were a solo start-up business. This can apply to everything from shop fitout and construction through to equipment, furniture, supplies and inventory – basically everything you’ll need on an ongoing basis. This also helps when investigating the location of your new franchise business, as commercial centres are more willing to negotiate on areas such as rent costs and leasing agreements with known and reputable brands.

5. Tax advantages

The Australian taxation system is designed to favour businesses and provides many small business concessions, so the opportunities to succeed are great. Naturally there are many different types of entity structures that you can form, with different marginal tax rates for each one, however consultation with a good accountant will provide you with information on how to arrange your franchise business so it can become the best asset you will ever own.