Aspiring Entrepreneur? Consider Perfecting Something That's Already Built A franchise is the fast track to business ownership.
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Some entrepreneurs are interested in building a business from the ground up, maintaining control and determining the direction of the business. Other entrepreneurs prefer to perfect what's already built, streamlining processes and refining operations. And entrepreneurs who fit the franchise model aren't alone: "The Franchise Business Economic Outlook" report by the International Franchise Association predicts franchises will see employment growth in 2018 of 3.7 percent, along with a 6.2 percent increase in output.
With the economy strengthening and the franchise industry expected to grow, franchisees are in a good position to benefit their businesses and local communities. Some believe franchises are in an especially strong position at all times, citing The Stat as proof: namely, that 90 to 95 percent of franchises succeed. While one 1980s U.S. Department of Commerce study did reflect these findings, they came from a voluntary survey, which likely skewed in a positive direction because successful franchisees were naturally more motivated to share their success.
Most estimates pin the success rate of franchises pretty close to the success of independently held small businesses overall. That's because the success of franchises -- regardless of the model itself -- rests squarely on the same things as any other small business: leadership, skill and market demand.
Related: 2018 Top Franchises from Entrepreneur's Franchise 500 List
Build it, and they will come.
Franchise opportunities are less intimidating for first-time entrepreneurs and others who prefer having a bigger support structure backing their efforts. As Lora Kellogg, president and CEO of Curious Jane, an ad agency specializing franchises explains, "We know that entrepreneurs want to go into business for themselves, but not by themselves, so proven systems, processes, marketing and franchisee support are key."
Independent entrepreneurs frequently find themselves bootstrapping their efforts or spending time convincing investors to back them, often without name recognition, compelling sales or sometimes even a solid business plan. Franchisees typically pour money into the same areas: inventory, equipment, real estate and payroll. They often have additional fees, from franchise fees to royalty or advertising fees, which are often a percentage of the franchisee's sales. Their business, however, comes with a household name and a product or service proven to have a foothold in the market.
The other major benefit is that franchisees have additional avenues for finding capital. If a franchise is a member of the Small Business Administration's registry, its franchisees can find a smoother path to loan application approval -- the registry information eliminates the need to prove the franchise's financial health. Franchises themselves can help owners obtain funding, from offering funding facilitators to guaranteeing their loans.
Once a franchisee is part of the fold, he gains access to the franchise's tools and resources. Unlike independent entrepreneurs, the franchisee gets the benefit of mentors at the franchise, as well as other owners in the franchise's network and community. Learning from others' mistakes and triumphs gives him the advantage of sidestepping obstacles that slow down less experienced owners. Franchisors often offer training sessions, on-site franchise consultants and webinars. Many of these are centered on the different segments of owning a business -- marketing, accounting, tech support -- that entrepreneurs often start their businesses not knowing. Wearing many hats becomes a lot easier when an entrepreneur can adopt a proven system.
Related: The 7 Cheapest Franchises on the Entrepreneur Franchise 500 List
It takes the right kind of person.
Franchisors would tell interested entrepreneurs, first and foremost, that if they're not willing or able to get involved in their local communities, they won't be successful. Successful franchisees strive to be an integral part of their city, making the company's name synonymous with positive actions. Volunteering at shelters, libraries, hospitals and churches are all ways franchisees find themselves getting to know their prospects and customers and building loyalty. This is also a promising way to network with other local business owners and discover opportunities for sponsorships and participation in local events.
The type of franchise an entrepreneur selects will also determine her success. If she wants to open a new McDonald's location in a town saturated with fast-food options, she likely will struggle to grow her business. If, however, she's looking to open a Panera Bread in the same town -- bolstered by a strong but quiet group looking for healthier eating options -- she may have found her niche. Assessing where an entrepreneur's interests and skills intersect with the community's needs is key to success.
One other factor differentiating successful franchisees from independent entrepreneurs is a willingness to have a boss. Many entrepreneurs are thrilled at the prospect of ditching a manager, but franchisees work within a franchise's rules. This is to their benefit -- they did, after all, join a franchise to avoid the missteps others experience, which means rules have been written to avoid making them. Joel Libava, "The Franchise King," says, "If you want to become a franchisee, you have to lose your ego."
Aspiring business owners seeking to determine which franchise will bring success to them and their communities should give these 10 growing franchise brands a look.
Related: The 10 Best Franchises to Open in 2018
1. Rockin' Jump
Rockin' Jump is an indoor trampoline park franchise that offers a fun birthday party location for children and a gym membership alternative for adults.
2. Crunch Fitness
Crunch Fitness stands out from numerous other gyms, thanks to features such as proprietary group fitness classes, pressure-free enrollment, complimentary tanning and HydroMassage®.
3. The Gents Place
The Gents Place, which styles itself a "Men's Grooming and Lifestyle Club," offers a unique customer experience, positioning itself as a male spa retreat for consumers focusing on their health and wellness.
4. Bella Bridesmaids
Bella Bridesmaids, with more than 40 showrooms nationwide, focuses on a niche market: designer bridesmaid dresses in every style, color and fabric imaginable.
5. Tutor Doctor
Tutor Doctor delivers high-quality, reasonably priced tutoring services in students' homes, enabling owners to help children excel while creating their own schedules.
Velofix is a fleet of mobile bike shops designed to keep cyclists on the road; each velofix vehicle connects to a cloud-based system that schedules customer visits, accepts payments and tracks inventory.
7. Right at Home
With the Baby Boomer population aging and healthcare facilities squeezed tight, Right at Home offers an alternative by providing in-home care and assistance.
8. Bach to Rock
Bach to Rock, a music education company focused on eliminating what kids dislike about music lessons, offers music camps, birthday parties, individual lessons and group band play.
9. TeamLogic IT
TeamLogic IT offers managed IT services, consulting and IT solutions, catering its recommendations to individual businesses' needs and stages.
10. Kona Ice
Kona Ice is a shaved ice company that operates in food-truck fashion, enabling businesses, community events and more to offer sweet treats wherever people gather.
The best business model for individual entrepreneurs is the one that specifically works for them, and franchises offer aspiring entrepreneurs the opportunity to perfect something that's already built rather than start from scratch. Franchises still demand high-quality leadership and strong skills in order to succeed; franchisees may not have started their businesses, but they might be the ones to elevate them.