Franchise Advantages

Is a traditional franchise still profitable or are there advantages to a virtual franchise model? This is a subject that I have often pondered when looking at why people select the franchise route when setting up their own business. I can certainly understand the attraction of a franchise; setting up in business on their own with a lack of confidence in their abilities means that for some people, the franchise route delivers a faster start combined with a business model that is proven. Some might say that it removes a lot of the guesswork when setting up your own business, because the set-up and preparation has already been done.

I would just like to challenge that for a moment. That what is being delivered is a business that will definitely succeed as it has elsewhere, but is that really true? What is it that makes a business succeed? Can there be any such thing as a failure proof business? model and succeed? Does running a franchise provide you with an improved likelihood of success over anybody running their own independent business?

Questions, questions! Right, we need to study this in more depth and have a go at getting to grips with what it is that actually contributes to a business succeeding. I’ll revert to one source in particular, due to the number of sources that Moyak K. Mason also refers to, when trying to understand what makes a business succeed or fail. Suffice to say, that research conducted for the paper, ‘What Causes Small Businesses to Prosper?’ points to evidence that suggests that success or failure does not come down to management tools or techniques. Furthermore, a good grasp of the fundamentals of business is more likely to establish a successful foundation for your business than any . In the end, a system is just a system that can be followed or not followed, and will never be the ‘cure all’ that prevents a business from failing.

Companies and businesses that do succeed, possess some exemplary traits and practices:

– They excel in defining and planning their strategy and remaining focused on it.
– They are always good at executing their strategy, rising and meeting customer demands, and providing staff with the authority to make the decisions required to assist in remaining flexible to the ever-evolving market.
– Internally, the company culture includes an expectation that performance is high, who motivate their employees and management, and reward them not only financially but also psychologically.
– Their organizational structures are not preoccupied with trivial matters, but zero in on improving business efficiency, reducing red-tape and bureaucracy. Simple is where it’s at and the promotion of cooperation between internal departments and personnel.
Taking into account that the numbers of business that fail is documented as being equally frequent for franchised businesses, how great of a benefit is a franchise business to success? A 1995 study undertaken by Dr. Timothy Bates of Wayne State University writes that failure rates for a franchise business was in excess of 30% yet those exact same companies also saw reduced profits compared to their stand-alone competitors. Considering the rules that are placed on a franchise by the franchisor, the entrepreneurial creativity displayed by those running successful businesses wouldn’t be very easy to reach within the restricting framework of a franchise. Of course, some may argue that such creativity should be coming from those who are the franchisors, but then you have to ask; what place does a creative entrepreneur have in this picture?

The advantages of a franchise business start to look less advantageous than before when put into the context of the almost quite damning failure rates that weren’t put together by a national franchise association. The level of credence you give to which ever set of numbers comes down to whether you believe that national franchise associations are more interested in promoting the franchise model than providing a balanced picture to would-be franchisees! You can be the judge on that one.

Advantages of the new online franchise model:

So if the franchise model isn’t all it’s cracked up to be, what does an upcoming business entrepreneur do when a less risky business route is sought where the business model is already working?

So, unless you are going to say that you really have to open the next franchise of McDonalds, it’s most likely that you want to create your own fortune by building your own business but without all the unnecessary risk. If so, then you might well consider a business system and model that guides you through to constructing a business that will achieve success, without the punitive costs and restrictions of a franchise would be a better option? What about a system that plugs you into the best training and mentorship available, whilst still allowing you to retain your entrepreneurial creativity? A virtual business system that automatically handles all of the telling and selling, as a viable franchise alternative, while allowing you to spend your time generating leads for your business, with an average 80% profit margins, but with none of the punitive costs and royalties, a franchise alternative is a reality and the advantages are clear.


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