Sunday, April 22, 2007

Part II: Reasons 9-16
Why Franchises Are Superior To Traditional Small Business Models

In our last post, we outlined and discussed "Reasons 1-8" that addresses the advantages Associates will have if they chose a franchise rather than a traditional small business model. In this post, we'll examine reasons 9-16.

Part II: Reasons 9-16

9. As a franchise owner, you have collective buying power. This is an increasingly greater advantage because there are more conglomerates and larger companies today than there were just 5 years ago. The small business person really can't compete with conglomeraes to lower cost.

Because small businesses typically buy supplies and services in much smaller quantities, their per item cost is higher which can lower profit potential. When you become a franchisee, you have the collective buying power of the entire franchise network. Therefore, you will receive much lower prices for goods and/or services.

10. Initial training is provided for operating personnel, which is very important. Before actual business operations begin, a complete and extensive training program is provided by the franchiser.

11. Most franchisers offer ongoing supervision and consulting. This means when you open your doors for business, someone will be there to hire the initial work force, train them and help solve problems as they develop. This is a valuable learning experience for you. Eliminating problems before they impact your earnings, saves you time, money and effort. This cost reduction increases your profit potential.

12. You will also receive local and national advertising programs. Most franchisers will give you a local advertising program you can implement immediately. Normally, your advertsing program is professionally designed with the high profile of large scale national advertising. This gives you an edge over local competition.

13. Many franchisers provide point of sale advertising; such as ceiling mobiles, posters, etc. These are expensive to develop and they are very helpful in creating that extra point of sale impetus that can increase your overall profit potential. The sophisticated advertising material franchisers provide gives you a much better business image and identity.

14. There is also uniform packaging. The franchiser has already worked out the best size and type of packaging. This is a tremendous savings in time and money. Plus, trial and error has been eliminated for you. For instance, a food product package may need a certain treatment to resist moisture or to retain heat. The franchiser has already invested in the research and development to produce the required packaging material and manufacture it on a large scale. As a franchisee, you can take advantage of this.

15. The vast majority of franchise companies do ongoing research and development. They are constantly working on new products, new variations on existing products, new ideas, new concepts and new systems. Franchisers are experimenting and testing all the time. They can do things that you, as an independent business person, can't afford to do. Many have their own research and development laboratories and you, as a franchisee, are the recipient of their work and continuing efforts.

16. Some franchisers even provide financial assistance. In some cases, the franchiser will finance part of the initial acquisition cost, whether it is equipment, leasehold improvements or land. Some even provide assistance to lower your initial cash outlay which saves you money.