You are the average of the five people you associate with most; and all of my closest friends, role models and mentors are entrepreneurs. One question of debate often comes up when we are together, and that is, “do you franchise or do you start from scratch”?
There is no right answer to this question. As the owner of multiple franchises, I have experienced the benefits of franchising, but I still have a desire to start my own business concept one day. And yes, I will franchise it of course (more on that down the road). It really boils down to two factors when choosing to develop and bring to market your own new product or service or do you purchase a proven franchise model. They are:
1. Do you have the time, knowledge and resources to bring a new product or service to the market?
2. Is your time and money better spent growing a franchise business with established brand recognition and a proven operating model?
Even if you are the minority that can afford (time and money) to bring your idea to market, for many the safer and surer choice is to franchise. By choosing to franchise you are potentially eliminating many of the roadblocks that aspiring entrepreneurs face such as:
1, receiving funding (while retaining equity)
2. jumping into a proven and successful operating model
3. leveraging national brand recognition
These are factors that can be leveraged to get you everything you want in a business and nothing that you don’t. Like any opportunity, it is best to put your best foot forward and ask yourself if you would be a good franchisee?
Raising Capital Without Giving Away The Pie
Funding, or the costs associated with RAISING TIMELY CAPITAL is the number #1 reason why businesses fail to launch or scale. Why go through the pain and effort of launching a brand to only run out of money and have to close your doors? The worst-case scenario is that a founder has to sell most of their shares in the business; yet still has to do all of the work to create generational wealth for their investors, instead of for themselves. If you are good at managing risk, franchising is a great way to avoid funding pitfalls.
Choosing a proven franchise means that you have identified your value and theirs. You understand their operating model, funding requirements and are stepping into a widely recognized brand. And if you recognize this franchise for these qualities, that means others have as well, including lending institutions. There is a good chance that franchises with proven track records and year-over-year industry leading performance already have relationships with the industry’s leading lenders. At that point the lending institution is underwriting you, the owner/operator and not the business model. This greatly improves your chances to secure timely financing to begin your entrepreneurial dreams.
By choosing a franchise over starting your own business you are eliminating many of the trials and tribulations associated with inventing a product and bringing it to market. You need to ask yourself, "is your time, energy and experience best leveraged by developing an unproven product or service?" or is it better to go with a franchise that has all of the traits you are looking for in a business, with nothing that you don't? Time and money savings will allow you to preserve your opportunity for expansion; thus creating long term generational wealth.
Why Re-Invent The Wheel? Choose A Proven Franchise Model From Day One.
The most important factor when choosing to buy into a franchise is their PROVEN OPERATING MODEL. When franchisors introduce their models to the market, they often start with one or two locations in a market where their HQ is located. Over time they develop the model, pivot, iterate and and try to perfect it, ensuring that it can be replicated in any market across the country and sometimes the globe. This is their value proposition. You know that when you join that franchisor, you are supposed to be receiving a proven and predictable model that requires very little trial and error.
You Never Knew There Were So Many Franchises
When you create a product or service the one thing you have to develop is your BRAND. Who are you, what do you do, how do you solve the consumer’s problem? That’s just the first step. After that initial push, you need to carry your “brand” forward and answer the question of why do you solve the consumer’s problem better than your competitors do? You can get the sense that this can be a very iterative endeavor, let alone costly.
Eliminating the time associated with this effort is another reason why someone should consider franchising. Often you can find brands that have over 20 years of results and carry strong national brand recognition. Buying into their brand gives you immediate access to their trademarks and their consumer recognition. This will help your new franchise venture grow from day one.
MAKE YOUR DECISION
When you decide to start your own business, concept or product, you WILL experience many pivots, and identities. These cost money and time that you may not have. Choosing a franchise model that skips that cycle will increases your odds of overwhelming success. Choosing a proven franchise consultant with an established network will further enhance your chance at succeeding in the game of life and with your new franchise.
To learn more about the incredible franchises with low investment criteria, high margins and rapid break-evens schedule a call with Dan Lorenz.