Individuals choose to open a franchised business as opposed to starting from scratch for a variety of reasons. Perhaps the greatest advantage franchise owners have is a proven business model. In other words, the business has a greater likelihood of achieving success and profit. Franchise businesses exist in all sorts of market sectors. McDonald's Corporation and Subway provide two of the top 10 franchise opportunities named by Entrepreneur magazine for the year 2010; Jani-King provides a commercial cleaning franchise business and H&R Block uses franchises to provide tax preparation services.
Branding
Franchised companies, especially larger ones such as McDonald's, provide franchise owners with a well-known and established brand. This makes attracting customers simpler than it would be if you were starting as a completely new business entity; the customer base is already present when you get active as a franchise. A trusted brand is also one that speaks for itself, so franchise owners may have the upper hand if their franchise brand is well liked and respected.
Setup
Franchisors typically provide franchise owners with everything needed to set up. Franchised businesses are typically constructed "cookie-cutter" style, meaning that each franchise building looks the same or very similar on the inside and out. Franchisors provide construction resources and interior decorations as well such as tables and chairs as well as cash registers.
Resources
Franchises typically use the same resources and suppliers of the host company. Using the same suppliers as your franchisor eliminates legwork and the confusion of trying to find and evaluate your own suppliers. More importantly, your franchisor has a great deal of purchasing power since supplies are bought in bulk, and this savings is passed to the franchise owner. Buying supplies at a lower cost results in higher profit margins. Both of these allow for a faster start if you want to get your franchise up and running quickly with minimal hassle.
Marketing
A franchise owner can piggy-back on the franchisor for much of the marketing that needs to be done. This keeps advertising costs low and allows more profitability to flow from the local franchise. National commercials, radio advertisements, and newspaper coupon inserts are all major marketing efforts usually performed by large franchise corporations including fast-food companies, restaurants and other service businesses. This means that promotions and "specials" do not need to be brainstormed by individual franchises as this is done on the corporate level.
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