Franchise Business Consultant Service 1
Franchising provides a way for franchisors to grow their businesses more quickly than they could on their own. For franchisees, it reduces the probability of failure. Substantial personal resources are required to pay the franchise fee and all the other costs associated with start-up. The franchisor may or may not provide assistance with financing.
Often entrepreneurs engage a franchise business consultant to help evaluate and select the best fit to the buyer. Franchise models, investment, and requirements vary widely, so it is imperative that the potential franchisee conduct thorough due diligence before proceeding.
Franchising provides the entrepreneur with an opportunity to enter the world of small business without all the risks usually associated with starting a business from scratch. In most cases, the costs of entering a franchise are less than the costs of buying an existing business. If dealing with a reputable franchisor, buying a franchise represents the acquisition of a proven business model, thus reducing the odds of failure considerably. Franchises are big business. Franchises are very important to commerce accounting for 45% of retail sales, or $1.55 trillion in total revenue in 2010, according to American small business counselors at SCORE. One in 12 businesses is a franchise, across 75 industries and numerous subfields among them. Just a few of the well-known franchises are Krispy Kreme, Burger King, McDonald’s, Taco Bell, Baskin Robbins, Ben & Jerry’s, The Body Shop, and Motel 6.
Franchises exist worldwide. The European Franchise Federation estimates that 8500 distinct franchise brands are operating in the European Union, compared to about 2500 U.S. brands (2009). The franchise industry is particularly strong in the United Kingdom, with the number of franchise units increasing by 44% over the last decade. Franchising accounts for 10.8 billion annually in sales. The personality type of the successful franchisee is that of a person somewhere between an entrepreneur and an employee. The hard work and drive associated with the entrepreneur are still needed for a successful franchise, but the typical franchisee neither needs, nor typically has, the vision and constant pursuit of new ideas that are typical of most entrepreneurs.
Excerpted from "Raising Entrepreneurial Capital," by Vinturella and Erickson.