Franchise & Distribution Law

Franchise vs Start-Up

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It is often said that starting a franchise business has its advantages, a proven business model, ongoing training and support, and an established brand. Here are a few more advantages that franchisees take the benefit of when joining a franchise system.Development and Innovation. Running a small business can be taxing enough, and keeping up with technological and industry advances may be difficult or impossible. With a franchise business this critical aspect of operations ^ is taken care of for you. Good franchisors dedicate the necessary resources to ensure that research and development with respect to customers, the products, and the brand as a whole, is continually addressed. More particularly, such franchisors will be doing the necessary and important work to keep their concepts fresh by introducing new methods, products and services from time to time.
Supply Chain Strength. Economies of scale provide franchisors with significantly more bargaining power than a startup business would otherwise have in sourcing relevant products, supplies and services. A diligent franchisor will routinely negotiate more favourable terms for their franchisees and the franchise system (resulting in lower costs, increased profits and competitive advantage). In some circumstances, the pooled buying power (of all franchisees) may in fact qualify the group to purchase from suppliers that would otherwise not deal with smaller accounts.
Lead Generation. Franchisors can be a great source of lead generation. Whether through a central call centre that refers inquiries to the relevant franchisee’s territory, or through affiliations with industry associations, or comprehensive marketing programs. This can be an enormous benefit to a fledgling business.
Part of larger system. Many franchisees find comfort in the fact that although they are operating their own business, they are part of a larger enterprise of other business people who are experiencing the same successes and challenges as they are. There are a number of advantages that arise out that dynamic. Firstly, it provides franchisees with the ability to obtain support and assistance from peers who may have faced the very same challenge(s). Also, it is an opportunity to learn from their successes.

This article was first published on BeTheBoss.ca.

Andrae Marrocco’s BeTheBoss.ca contributor profile.

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