FRANCHISING – THE SMART CHOICE FOR ENTREPRENEURS
When starting your own business, establishing credibility with potential customers is absolutely vital. Being part of an established franchise system gives you that credibility from your very first day of business. People will know what your salon stands for before they walk in the door – so every visitor will be a potential customer.
A PROVEN FORMULA
Simply put, franchising is a network of independent and proven business relationships that allow a number of people to share:
- Brand recognition
- Tested and proven business model and operating systems.
- Innovative and proven marketing programs.
- Franchise and corporate best practices and learnings.
- Group purchasing power.
Franchising is one of the most popular methods for starting and growing a business in the United States today. When a franchisor provides the right business model and demand for the product is high, franchisees are well positioned to benefit from the power of branding.
STRENGTH IN NUMBERS
In the United States in 2005, more than 900,000 franchised establishments generated over $880 billion of direct economic output, or over 4.4 percent of the private sector economy. The franchise industry provided jobs for over 11 million American workers, or just over 8 percent of all U.S. private sector employment. Including the additional economic contribution of franchising activities, the overall economic contribution of franchised business was $2.3 trillion in 2005, or 11% of the US economy. These economic activities provided for than 20 million jobs for American workers, over 15 of all U.S. private sector employment. The franchising sector expanded by over 18 percent from 2001 to 2005, adding more than 140,000 new establishments, and creating more than 1.2 million new jobs. Direct economic output increased by more than 40 percent from 2001 to 2005, from $624.6 billion to $880.9 billion. Including the impact of additional economic activity that occurs outside of franchised businesses and because of franchising activities, the franchising industry added nearly 3 million jobs and over $780 billion of economic output to the U.S. economy.*
These numbers speak for themselves. More and more, smart entrepreneurs recognize that the advantages of joining a reputable franchise generally include things like opening quicker, experiencing success sooner, quickly developing a customer base, taking less risk and increasing the likelihood of profitability.
WHAT TO LOOK FOR
In choosing a franchise opportunity, you should carefully look at the franchisor’s business philosophy.
If the franchisor is building a system of interdependent franchisees that are committed to
attracting and retaining customers, growing faster than the market, expanding more
aggressively than the competition, all while achieving high margins, then, that franchise
system is worthy of serious consideration.
*Economic Impact of Franchised Businesses, Volume 2 – International Franchise Association.