Buying a franchise can be an attractive proposition for a large number of reasons. It provides the opportunity to be part of an established brand with a proven business model, with all of the knowledge, processes and procedures already in place. You’re joining a network with a team on hand for training and support, from the start up phase to launching and growing your new venture. Investing in a franchise is often perceived as less of a financial risk than embarking on an independent enterprise, as well as offering the ability to be up and running and generating income relatively quickly.
It is not surprising therefore that franchises are particularly popular with investors who have no previous experience as business owners. Coming to the brand often with a particular passion for the product or service, and possibly with a prior background or talent in that particular sector but without any prior experience of running a company, a franchise can feel like a “safer” route to business ownership. However, it is perhaps a misconception that franchise ownership is solely the preserve of first time business owners. In fact, franchising can offer an exciting investment opportunity for experienced entrepreneurs for several reasons.
So why would an individual who already has a track record of success in business choose to join a franchise brand?
Embarking on a new challenge
Successful entrepreneurs are motivated and driven innovators, looking to push boundaries and grasp opportunities and fresh challenges. A franchise can offer chance to quickly plug a gap in the market for a product or service, and when the hard work in terms of development, branding, systems and processes has already been done by the franchisor, the franchisee investor can hit the ground running and have more time to devote to relationship building, leadership and business growth.
Expanding a portfolio
For the very reasons above, a franchise can offer an attractive opportunity to add a new business venture fairly quickly and easily to an existing commercial portfolio, particularly within the same or a similar industry where the franchisee will already have experience and connections, as well as very possibly transferable key personnel who can help to get the newest venture off the ground.
Becoming part of a team
There is no doubt that business ownership comes with many challenges, and leading a business can feel lonely and isolating at times. The idea of being welcomed into a team of like minded individuals and franchisees, with the ability to access help and support when required can undoubtedly be a strong pull, and help to alleviate some of the elements of stress and worry that comes with running an independent venture.
But whilst there are significant advantages to franchise ownership for an experienced entrepreneur, joining a franchise brand may also present a set of challenges. If the potential franchisee has always been the leader and decision maker in their business journey to date, becoming part of a network where franchisees must follow the franchisor’s system, rules and regulations can feel restrictive and prescriptive and the franchisee may struggle with that loss of some elements of control, potentially leading to feelings of frustration. From the franchisor point of view, welcoming an experienced entrepreneur into their team can provide a valuable new injection of skill and experience which in turn can benefit the whole brand and network. However it will also mean that careful and sensitive relationship management is required to ensure that the franchisee continues to feel valued and fulfilled in their new role, whilst understanding and appreciating the need to operate in line with the franchisor’s framework.
So, to go back to to the title of this article, is investing in a franchise simply for first time business owners? Absolutely not. The right franchise can offer an excellent opportunity for an experienced entrepreneur, and add value for both franchisee and franchisor. But from the perspective of both parties, honest and open discussions pre-contract around goals, expectations and the very nature of the franchise model are crucial in ensuring that their new business relationships thrives.
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