What Kinds of Opportunities Does Franchising Offer? (Part 2)
Established Brand Awareness
Everyone knows what the McDonald's logo looks like and what the "Golden Arches" represent. No matter where you go in the world, if you set foot inside a McDonald's you can order a Big Mac or Quarter Pounder and know exactly what it's going to taste like. Established brand awareness, reliability, and uniformity are part of the power of franchising.
Imagine the time and resources needed to create awareness for an independent, start-up brand. It would be tremendous. An established franchise brand already is well-known and provides each new franchisee a market presence that is recognizable locally, nationally, and globally.
Brand awareness -- typically through coordinated marketing and advertising efforts -- is something a franchisor handles, while you and your fellow franchisees reap the benefits. Established, successful franchisors will prepare and pay for the development of professional advertising campaigns at the national, regional, and local levels -- a practice that benefits all the franchisees in the system and builds the brand.
Many franchisors also work directly with their franchisees to provide advice and resources to help them develop effective marketing programs for their local area through a cooperative marketing fund (you and all of your fellow franchisees have already contributed to the fund through your fees and royalties).
Franchisors also provide marketing materials to their franchisees, as well as marketing guidance starting with initial training and continuing through the length of the franchise agreement. One of the biggest benefits of owning a franchise is the marketing program, so keep that in mind as you make your franchise selection.
From a competitive standpoint, franchising couples market penetration with brand awareness. As additional franchised or company-owned locations are opened in your region (and throughout the world), the brand's name recognition increases -- further enhancing the value of each franchised unit.
Economies of Scale
Any large organization has built-in economies of scale. Franchising is no different, and the economies of scale created by the franchisor are available to all franchisees. That's something that you won't find when starting your own business, perhaps ever. There's power in numbers.
So how do these economies of scale benefit you, the franchisee? For starters, a franchisee can typically buy goods and supplies through the franchisor at a discounted rate -- everything from cleaning supplies and uniforms to food products and ingredients. Franchisors that purchase products and services for their franchise network have the power to negotiate significant volume discounts from vendors and suppliers. The end result is a competitive advantage that results in higher operating margins for each franchisee.
This power in numbers also benefits other areas of operations, such as marketing and advertising, as described above. Because the franchisor, you, and your fellow franchisees are contributing to a regional and/or national marketing fund, the amount and quality of your advertising efforts are significantly greater than if you were an independent business operator -- providing a tremendous advantage over independent and smaller competitors.
Most independent businesses can only dream about the research and development programs available in many franchise systems. This ongoing R&D makes a huge difference in product development, quality, and profitability -- further increasing your chances of success and profitability, while allowing you to concentrate on running the business. The franchisor can try out new ideas, products, and services at their company-owned units, delivering them to franchisees after they're perfected.
And when you become a franchisee, you gain immediate access to a peer group of franchisees all across the country and world. Experienced franchisees have faced the same problems and questions that you will face for the first time as a new franchisee. Since every successful franchise unit helps the brand to grow as a whole, most "veteran" franchisees will be happy to share with you how they've handled those issues, and provide you with solutions and advice on avoiding beginners' mistakes.
There are many, many strengths franchising offers a business operator.
3.1: Independence & Stability
3.3: Researching a Franchise Online
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