Why Buy a Franchise? Understand The Benefits of Franchising
Updated: Mar 10
This article is meant to shed some light on the major benefits of owning a franchise business versus starting your business brand. We hope you find it useful.
What is franchising a business?
In the U.S. a “franchise” includes an arrangement where a founding company (franchisor) licenses the use of their brand name, products, business systems and/or processes to a separate business (franchisee) which then operates under the name of the founding company. In exchange for the intellectual property rights and licensing of the brand name marks, the franchisee will typically pay a fee and royalty percentage of revenues to use the system and be part of the growing brand.
How many franchised businesses are in the U.S.?
According to a Nov. 2022 report by Statista Research, there were 774,965 franchise businesses in the United States in 2021 which are attributed to employing 8.1 Million people and generating $787 Billion in sales growing annually. As well, a December 2021 U.S. Census Bureau report (2017 data collection) states that of nearly 300 industries which offer franchise opportunities, 11.4% of those were franchised businesses.
Did you know? Franchising business opportunities have come a long way over the years and now encompass over 300 types of franchise industries.
Top categories of franchise businesses in the United States according to U.S. Census report (2017 data) include the following:
Quick-serve and full service restaurants
Major hotel brands
New car dealerships
Real estate offices and agents
Snack and beverage bars
Today, a large majority of people surveyed favorably view locally-owned franchise establishments and believe that franchise locations offer quality products and services.
Should You Start a Franchise Business or Go it Alone
You’ve decided to open your own business. Congratulations! Now you must decide, should you buy into an established franchise business opportunity, or will you go it alone and develop a new brand and new business model?
Launching a successful business requires an entrepreneur to possess skills of growing a business towards profitability.
Assuming the business owner knows which type of business they would enjoy owning, the primary question now is – Is franchising a better option or should they develop their own brand & concept?
When answering this question, a potential business owner has many factors to consider. And while going it alone might be the answer for some – namely those who have an unexplored idea that functions outside of established success models – the major benefits of franchising often draw entrepreneurs into buying a franchise business.
In the business world, lost time costs money and more.
Franchising benefits for starting your own business are rooted in one essential component – time. Lost time can be lost opportunity, lost clientele, and slow brand affirmation as you are figuring out what works well for business. Any day that a new business owner can eliminate from the trial-and-error phase of their journey is a day that can be dedicated to revenue-generating activities to grow the business faster. Not to mention, avoiding the added risk of financial loss that often comes with a new concept trial-and-error approach.
Major Franchising Benefits
Established franchise systems offer a valuable “time advantage” that is associated with the following five major benefits of franchising:
1. Proven franchise business model
2. Established reputation and franchise brand
3. Industry partnerships and pricing for franchisees
4. Franchise training systems and quality control
5. Franchisee business consulting and coaching
1. Proven Franchise Business Model
When you buy a franchise, you are essentially buying a system of business practices that contribute to a successful business model. The model has already been tested in the marketplace which reduces the risk to the business owner.
Components of a franchise business model might include:
· Targeting business locations based on previous success & customer demographics
· Constructing the retail space for maximizing revenue opportunities
· Business launch and advertising strategy
· Successful product and services offerings
· Customer acquisition and retention strategy
· Annual brand marketing game plan
· Business growth & optimization process utilizing key performance indicators
As one example, Glosshouz USA Spa Centers offers a highly successful monthly subscription option, called the Benefits Flex Fund, BFF Savings Program(™) for regular clientele. This offering is the product of years of real-world testing designed to optimize for customer retention, client value proposition, positioning in the market, bottom-line profits, and guest satisfaction. In fact, the recurring revenue model derived from the Glosshouz BFF Savings Program earns the business 62% of its impressive annual revenues. Owners of any Glosshouz franchise will benefit from the established BFF Savings Program and the profitable business it has the potential to create.
2. Established Reputation & Franchise Brand
One of the most challenging and biggest investments a new business must make is in developing its brand. In fact, new businesses typically take 2-5 years to establish their brand presence.
Consider the new corner shop down the street. How does the shop alert local shoppers of its mere presence in the community? How do potential shoppers learn about the products they can purchase at the location? How will customers remember the new establishment when the need for its offerings arises?
Entrepreneurs who go it alone often spend years investing heavily in creating brand loyalty. Brand awareness and desirability can be one of the most challenging barriers to success for a budding business. With the franchising benefit of establishing brand personality and proven customer testimonies toward the brand, much of this work is already done.
A quick online search can provide a potential customer with the peace of mind that only years of online reviews can offer. Over the years, Glosshouz has worked hard to develop customer relationships, create great experiences, and provide favorable online presences for the brand. Our raving online Google reviews and customer acclamations give credence to the Glosshouz brand affinity in the marketplace. Online advertising within Glosshouz brand standards and word-of-mouth advertising have been our most successful marketing avenues. Essentially, buying a franchise can provide a built-in customer base – brand loyalty comes with it.
3: Industry Partnerships and Pricing for Franchisees
Business owners have plenty of work to do. But researching, interviewing, and negotiating with vendors for retail and backbar (service) products as well as vetting technology solutions doesn’t have to be on the list. Buying a franchise often means that an entrepreneur is handed a pre-vetted package of every vendor they’ll need.
With the Glosshouz spa center franchise system, the following systems and vendors are provided to create the optimal system solution.
· Operating systems
· Technology systems
· Customer feedback systems
· Accounting and finance systems
· Dozens of product & supplies vendors
· Marketing systems, developed assets, and tools
· Branded retail products
· Equipment suppliers
Another important aspect is that some vendor partnerships also offer group / volume purchasing power from which the whole franchise system can benefit. Group purchasing is derived from each franchise being part of a larger network of buyers. Therefore, vendors may commonly offer lower prices (in the hopes that they will sell a larger volume to the franchise network as a whole). This win-win pricing structure is pre-negotiated, which means another time savings for the new franchisee business owner. Additionally, a brand such as Glosshouz, has already been through equipment, product, and technology evaluation and buying processes and can give advice on negotiating purchase pricing.
4. Franchise Training Systems and Quality Control
Franchise owners enjoy a speed-to-market advantage for another reason. Not only will the franchisor often train the owner of the establishment, but they also typically provide a suggested employee training program. Since team development isn’t a straightforward process, this franchising benefit supports a quick business opening and a quicker establishment of routines and culture within the group.
Furthermore, employee training can improve staff retention and also profitability. According to a LinkedIn Workforce Learning Report, 94% of employees would stay in a position longer if the company invested in their career, and a Gullup Workplace Poll showed companies that offered strengths-based enrichment opportunities increased profit by 14% - 29%.
Franchise training supports tend to include:
· Operational training - how to run the appointment schedule, provide point of sale services, sell products and memberships, etc.
· Customer service training – important sales processes and education around the softer business skills of exceptional customer service
· Industry-specific training - varies from franchise to franchise, but with Glosshouz includes robust step-by-step protocols of how to precisely perform services and how to onboard and train your team
For the Glosshouz franchise system, we’ve invested hundreds of development hours over the last few years to create a robust online team training Glosshouz Learning Management System curriculum. This ensures that providers are completing services in a consistent manner from provider to provider as well as with a quality that lives up to our the Glosshouz brand standard. The learning management modules cover everything from Team culture and values, to creating the guest experience, how to sell the BFF Savings Program membership, to step-by-step documented protocols for every service we provide.
A quality franchise business training system cannot be under-estimated as it is imperative to assure guest satisfaction and enable customer retention to grow the business quickly.
5. Franchisee Business Consulting and Coaching
Be in business for yourself, but not by yourself. This saying is commonly used in the franchising world – and for good reason. When you buy a franchise, you join a network of like-minded professionals and gain access to the advice of those who have reached success before. This can provide a sense of camaraderie and support, as well as opportunities to learn from the experiences of other franchisees.
Glosshouz spa center franchisor systems are designed to help franchisees in a number of ways as they become onboarded for their franchise business ownership. When you buy into development of a Glosshouz spa center franchise, we will provide targeted territory analysis, help with lease negotiations, construction management services, grand opening assistance, ongoing advertising and marketing for the brand, ongoing training systems and support, best practices sharing of information for success, and continual business coaching and consulting.
When it comes to launching a business, it pays to consider the options between franchising an established brand and business model versus building your own company brand concept. Going it alone may be the best choice for some entrepreneurs who have a novel concept, but the benefits of franchising an established business model are worthwhile. From proven business models and industry partnerships to brand presence and improved staff culture, franchise owners gain many unique advantages that are not available to independent establishments.
In a world where time is money and money leads to faster time to profit, franchisees often benefit from the support systems of the franchisor company to gain an advantage over the competition.
Ready to learn more about franchise ownership with Glosshouz? Get in touch for a no-commitment conversation today!