The business landscape is ever-changing and has significantly shifted over the past year. The global pandemic, in particular, has forced many established companies to downsize or close down altogether. Corporate layoffs are now an unfortunate reality for the many workers and employees affected. But, this challenging economic period could also be an opportunity for those who’ve been laid off, as well as aspiring entrepreneurs, to take advantage of a new industry segment: franchising.
At the International Franchise Professionals Group (IFPG), we’ve been helping prospective investors discover the best franchises every year since our formation in 2005. As we look ahead to the opportunities that 2023 presents, now might be the perfect time for those laid off to invest in a franchise and join the world of small business. With that in mind, here are some of the most frequently asked questions (FAQs) about investing in franchises in the upcoming year.
What Makes a Franchise a Good Investment?
When purchasing a franchise, you’ll be investing in an established brand that is responsible for the quality of the business products or services. In effect, this is why franchising is a popular business model, as it greatly reduces the risk of launching a business from scratch during volatile or uncertain economic conditions.
It is also a great option for those looking to transition to an alternative career, as it provides an established business model and operational plan to follow. Moreover, the franchisor typically provides marketing support and technical expertise, so that franchisees are able to quickly catch up with the industry’s pace. On the top of that, with the right choice of a franchise, it is possible to be quickly profitable.
Are There Different Types of Franchises?
Yes, there are a few types of franchises and each come with unique benefits, opportunities, and challenges. The most common types of franchises are business format franchises, product-based franchises, and single-unit franchises.
Business format franchises offer a comprehensive system to the franchisees, which includes storefronts, business plans, operational procedures, trademarks, and/or services. These types of franchises include operations like hotels, restaurants, medical practices, and retail stores.
Product-based franchises focus entirely on the product being sold, such as automotive systems, health and wellness products, or child-focused services. These types of franchises typically offer sales-oriented support to sales teams and franchisees, and the franchisor might provide “extensive training, support for marketing, access to a protected customer pool, and other benefits.”
Single-unit franchises offer the franchisee a single storefront and allow for total autonomy. With single-unit franchises, the franchisor typically provides support in “recruitment, supplies, and market research” to ensure the franchisee’s success. These types of franchises are appealing for investors that prefer to take a hands-on approach to their business operations.
How Do I Choose the Best Franchise for Me?
In the world of franchises, there is no definitive answer to this question as the “best” franchise for each investor varies. That said, In order to find the best franchise for you, there are some key considerations to keep in mind when researching or discussing a potential franchise.
The first step is to do a thorough assessment of your skills, interests, and financial capabilities. You should also research the industry you’re hoping to join, as well as review the different types of franchises available. Moreover, consider the potential investment, franchising fees, support from the franchisor, expected returns, scalability, and location of the franchise.
Finally, it’s recommended to consult with an experienced franchise consultant to review the information you’ve gathered, as well as to obtain an understanding of the franchisor and its competitive advantages. An experienced franchise consultant can help to shed light on different locations, strategies, and necessary operational protocols required for success.
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