Owning a franchise is a great way to get into small business ownership. It essentially allows you the freedom and flexibility of going into business for yourself but not by yourself. As there is already a structure in place, as well as numerous other resources that can point you in the right direction, it’s much easier than starting from scratch.
Though there are risks associated with running any business, franchising offers a clear and transparent methodology of running a business and giving customers what they want. I truly believe that franchising is a wonderful and strong opportunity for those interested in starting their own business, and with the help of our team of experts, we can guide you through the process.
Facts and Figures
Before diving into small business ownership, it’s important to take a look at the numbers to understand what you are getting into. Though most of the guesswork is taken out due to the groundwork that has already been laid out before you, it still takes drive and determination to be successful.
Small Business Facts
First, let’s look at some facts and figures regarding small businesses. Of all the companies that exist, around 27 to 31 million of them are small businesses — with the definition of a small business being an independent company that has less than 500 employees. The surprising fact is that of those 31 million businesses, 80% of them have zero employees.
And yet, small businesses actually account for 65% of net gain employment. This means that 20% of those small businesses that do have employees are the largest driver of new jobs, and it has consistently been that way year after year. However, it’s important to note that though they are responsible for the creation of most new jobs, only 4% of small business owners generate over a million dollars in revenue.
Though a franchise is a small business, not all small businesses are franchises, so, it’s helpful to look at some additional figures that relate specifically to franchises. In the U.S. there are around 4,000 franchise brands. It requires opening 20 locations to put your business in the top half of all franchises and 100 locations to put your brand in the top 4%. Typically, people begin to recognize and become familiar with a brand when there are around 300 to 400 locations throughout the states. Having 300+ locations means having some sort of representation or location in all the primary and secondary markets in the U.S.
Why Get into Franchising?
Looking at these numbers, it might seem a bit daunting trying to imagine how you would get yourself into that top 4%, and while it certainly takes effort, it’s not impossible. The thing I love about franchising is that it provides a clear path towards running a successful small business.
Every franchise has something called a Franchise Disclosure Document (FDD) that is regulated by the federal trade commission. The document provides tons of useful information to help you understand the business by showing you things like the number of locations open, their typical top line of revenue, and what it cost to get the business started. With the help of this document, you can more easily funnel towards the top 4% of franchises when doing your search for a great franchise to invest in.
Relationships Are Key
The other aspect that I love about franchising is the relationships. Building good relationships starts with having a solid leadership team and an organized structure. When a franchisor has a team made up of individuals with the necessary leadership skills and even prior experience working with franchises, it helps drive positive experiences and profitability. It also drives peer-to-peer relationships and best practices — and good peer relationships help drive the brand.
A Proven Business Model
Another component that makes franchises a great option for small business ownership is that you can find one that already has a proven business model. A good business model means there is a system in place that drives consistent delivery of the product or service provided. And consistent delivery of your product or service helps drive a positive customer experience, which drives strong brand recognition.
How to Find the Right Franchise for Your Goals
I often ask what people are looking for in a great franchise, and the answer is often the same — it’s all about brand recognition. When you focus on the relationships and a business model that works, you are ultimately focusing on the customer experience, and that is what drives name-brand recognition. So finding the right franchise means finding one that you feel invested in to build those relationships and that has a proven system that works. There are, of course, data and other figures to pay attention to when selecting a brand, and we can help take you through the steps necessary to navigate those things.
I also have clients that ask why I love franchising so much, and it’s a simple answer. I love small businesses because small businesses are what drive our economy. They help increase our employment rates — they’re the backbone of our country. And with franchising specifically, as I’ve already mentioned, you’ve got a clear and transparent methodology already in place to help you towards giving people what they want.
Want to learn more? Here’s a video about how to better understand Franchising Facts and Figures.
If you are interested in shifting your career and enjoying a better work-life balance, connect with David to learn more about how franchising could work for you.