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What are the advantages of buying a franchise?

Monday, 30 August 2010 | By Oliver Milman

The unofficial motto of the franchise industry is that franchisees are in business “for themselves but not by themselves”. This saying perhaps sums up the greatest strength of franchising.


If you start up a business under any other circumstances, there is little in the way of a safety net. If you miss a loan repayment or make a mistake with your marketing or pricing, the consequences can be dire.


The ride may be a little less exhilarating when you’re a franchisee, but the system adds a comforting level of security that ordinary start-ups could only dream of.


Franchises do fail and you can’t expect to sit back and watch the money roll in without hard work, but the back-up you receive will boost your chances considerably.


The Franchise Council of Australia estimates that 98% of franchisees renew for a second term in the role. With a typical term lasting seven years, this compares favourably with the relatively high failure rate of new start-ups over the same period.


Your franchisor will provide you with the premises, tools, training and marketing support vital for your business. The initial capital outlay, beyond the franchise fee, can be far less than if you started a similar business yourself.


There are multiple advantages of being linked to a franchisor. You can tap into their bulk buying and negotiating power, allowing you to get stock more cheaply than you normally would.


You will have access to their patents, copyrights and inventions, as well as their research and development projects. You’ll also have the advantage of immediately falling under the umbrella of an established brand, rather than spending months and years slowly building up your own brand credentials.


Perhaps most importantly, you will have a franchisor to provide guidance, advice and ideas. An entrepreneur’s life can be a lonely one, with no-one to turn to for support. As a franchisee, you have someone who has seen and done your business all before on the other end of the phone, should you need him or her.