Aspiring entrepreneurs with little business experience or those looking to change career paths can look towards a franchise model as a relatively low-risk investment. Although franchises are thought to be high-priced to acquire, there has been a trend worldwide towards more affordable franchising models. Franchise models can exist in almost every industry so entrepreneurs can look for a franchise model within their field of interest or expertise.
A Franchise is a license given by a company (franchisor) to use the know-how, tried and tested processes and intellectual property (e.g. trademark) of the company to sell specific goods and/or services under the company’s name.
Franchise models are relatively low-risk investments where the parent company has had a good reputation of success. These ‘turn-key’ business models usually come with significant assistance and training from the franchisor along with a very detailed operations manual. The franchise also comes with significant brand recognition and the franchisee benefits from the marketing and advertising efforts of the franchisor. Other typical benefits of a franchise to the franchisee are an established customer base and a high return on investment.
To acquire a franchise, the franchisee would usually have to pay an initial start-up cost and would then be required to pay license/royalty fees on a periodic basis (typically yearly). The franchisee would need to ensure all the rules and regulations stipulated by the franchisor are met as failure to do so can result in loss of the franchise.
Many large franchises require major investment so if you’re not ready to expend that level of investment, it may be beneficial to start with a low-cost franchise before working your way up to high-cost franchises. Starting with a low-cost franchise can be a great, low-risk start to owning multiple franchise outlets.
