The Logic Behind Investing in a Franchise

The Logic Behind Investing in a Franchise

I find great enjoyment in business and have had the personal experience of starting and growing multiple businesses and being involved in franchises. Each route has it’s pros and cons but both have great upsides.
Not everyone is cut out for the demands and challenges each offers. Not everyone wants the risk involved and the responsibility of the daily operations each requires to be successful. My intent is not to discourage you, but rather encourage you to think rationally about advancing yourself. From the perspective of experience I started working for others and used the stability of those position to build my own businesses and get involved in franchises. I still hold that position and believe it to be the best for me. Remember between the intervals of the have to do’s is the opportunity to advance.

I read recently advice given from a supposed expert “to be an entrepreneur you have to let go of everything else” I disagree with this statement. There are many ways to get to 9 you can add, subtract, divide who cares as long we get where want to go and as long as we don’t hurt anyone else. Some professionals are focused in one arena and there are some like myself who have success in multiple areas. Success doesn’t disgriminate on the approach you or approaches you employ. Achievement has a compounding effect on future achievement – the point is start where you are and build up or if you are in a great position to add to it with something of value. Value is a broad term and can be interpreted in this situation to be fulfillment, enjoyment, and/or flexibility. I would advocate if someone is interested in owning their own business and has or qualifies for the resources to start it, they may want to begin with a franchise. Compelling arguments can be made to support this position. I will go over a few points of consideration that will hopefully improve your critical thinking and decision making process that can lead toward a rational decision and positive outcome.

My motivation is the challenge of progressing myself with self development and achievement in business. I find personal satisfaction in growth and advancement from formal education and informally from life experiences and business. DFL

1) Assistance and Greater Resources
– Good franchise networks provide good financing opportunities. They have influence in pricing with their numbers verse a small business who has less negotiation leverage. Many now even work with Veterans to help them get their loans or to make them aware of who is offering the best terms for loans. The larger presence a franchise can have with multiple sites allows them a more attractive position to realtors and financing entites and that can help with decreasing cost and gaining more value. These are not absolute and this does vary depending on which franchise you chose but that is where the anyltic approach to this decision is required.

It’s almost always harder to raise capital than you thought it would be, and it always takes longer. So plan for that. Richard Harroch

2) Support Network
– Any business venture can be an intimidating prospect and feel lonely and isolating. The benefit of a franchise is a built in support network. Not all Franchises act to provide this kind of support so due diligence in selection is needed and is required, if this is an attribute you are looking for. In general as opposed to opening your own business or in addition to having your own business many Franchise systems have a strong network to other franchise owners, IT specialists, Leaders in the field, strategists and financial experts. Networks that franchises have built in greater opportunities to succeed under decreased work loads. Less forced networking for fundamental supports built into franchise models leads to more valued networking with prospective clients.

Networking is an essential part of building wealth. Armstrong Williams

3) Proven Products, Systems, and Procedures
– In owing my own businesses one of the more time dominant aspects was developing systems, procedures, products and service. The ownes of those time dependent aspects when owning a franchise is not on you and that does help both with dimisnishing time constraints that can be reinvested in growing business and decreased mental fatigue that goes with attending to multiple variables rather than set variables that are limited by the structure of a franchise.

If you come from a solid structure, it doesn’t matter what you go through in the lifecycle of your business, things are going to work out. DFL

4) Proven Branding
– Branding is creating a name, symbol design that identifies and differentiates your product and services from other competitors .

An effective brand strategy gives you a major edge in attracting customers. Your brand is your commitment to excellence that customers can easily recognize and identify with. It tells them what they can expect from your products and services. It shows them why you stand out from your competitors.

The process can take years and a great deal of resources. A franchise should already have the brand established. The resources of an established franchise can catapult and focus efforts improving opportunities for ROI and profits.

The way to get started is to quit talking and begin doing. Walt Disney

5) Experience
– Experience is invaluable in business where we learn a great deal in the trial and error format. Sometimes that period of learning can result in the decline and failure of businesses. Having the advantage of a franchise can decrease risk and build in years of experience. Asking yourself – What is my risk tolerance. A higher risk tolerance may lead to the decision to start your own business and lower risk tolerance may lead you to decide to start a business via a franchise opportunity. Knowing how long you have funds to support your endeavor is a good preplanning activity to determine if the timing is right to start a business or franchise. Due to built in infrastructures some franchises can have you in a positive position sooner than setting up your own small business.

Start where you are. Use what you have. Do what you can.
Arthur Ashe

7) Advanced Marketing
-Many franchises are now offering a suite of software with web presence and rebound marketing. There are opportunities for inquires to be shared increasing access to customer base. A small business may not have the time and expertise to set these systems up or it may take years to do so. There is a trend developing good Franchise systems have well established resources built into them.

To any entrepreneur: if you want to do it, do it now. If you don’t, you’re going to regret it.” – Catherine Cook,

8) Personal Development and Growth
-Development is critical in the business world that is how you are promoted but in your own business it is critical to allow a competitive edge to your competition. There is always competition so differentiating yourself from a competitor will help you stay viable. Self development is possible and I am a strong advocate but when it is already built into a system the likelihood of engaging in it is greater. We can’t benefit from wanting to do something but we must actually engage to benefit from doing what is required. Attending to the added work load of a small busines means more barriers. The greater the barriers to the objective the greater likelihood of not completing it or being successful.
Are there a lot of advantages to investing in a franchise, I would say definitively yes with a proviso that it depends on your selection and due diligence regarding needs for the product and services and success rate of the franchise.

While there are benefits there are always risk or disadvantages to the choices you make, I would advocate first engaging in a decision tree. We have discussed in previous BLOGs and in my book Success Through Logical Thinking about reverse planning (an analytical process I would advocate using with this process) but here we will also discuss a decision tree. A decision tree may be a better analytical tool to use initially. A decision tree is a decision support tool that uses a tree-like graph of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.
Once you have determined your tolerance of risk then choosing between your own business, a franchise, or working for someone else will lead to your next steps in a logical progression. Personally, I have owned my own businesses and always will but I have also invested in franchises concurrently. I also have and will work for others because there are advantages and disadvantages to all possible options so a combination of techniques for me increase the probability of success. I really like a combination of them to ensure not only success but satisfaction. Ultimately being an entrepreneur and that is owning your own business or a franchise provides an advantage in self satisfaction that comes from the fulfillment, autonomy, freedom, and flexibility it brings.

The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese proverb.

Where ever you are in life there is opportunity. More mature people who sacrificed their own carriers are not excluded from these opportunities, and may have attributes that improve their potential for success. The proverb says it all, if you haven’t started its not too late – it’s time.

Risk more than others think is safe. Dream more than others think is practical.” – Howard Schultz

Utilize the logic provided here and in my other writings. Reach out to successful people for advice. Reference and research and ensure you have done your due diligence but ultimately you will have to muster the courage to try.

I wish you well. I am available by DM and have created a lot of contacts through social media and I am glad to share my insights so don’t hesitate.
My goal is to help those who want to make a positive change.

Dr.FrankLayman