Franchising as a Growth Opportunity

Today, franchising is a highly regulated industry that can offer great opportunities to individuals who want to realize their dream of going into business for themselves. Because of strict regulations, a lot of very specific information is available to the prospective franchisee while they are investigating a franchise opportunity. For individuals who have not previously owned a business, this is a perfect entry into entrepreneurship. Careful research, planning, training and support are the key fundamentals to help provide people who are seeking a way to own a business to getting started in this tremendous opportunity.

The beginning of franchises can date back as far as 1850, when a simple product such as a sewing machine was in the existence of being distributed nationwide. (http://en.wikipedia.org/wiki/Franchising) Although the sewing machine distribution was unsuccessful, food establishments took over the world of franchising in 1919 and have been headstrong ever since. Along with restaurant ownership came hotel establishments and developments. Consumers know that hospitality in terms of dining out and sleeping can be a turnkey startup. This started a wave of people wanting to buy franchises because of its ready existence and establishment.

Most start-up businesses fail within the first three years of existence. Poor planning is the number one reason as to why this happens. Although there is no right franchise for each individual to get into, timing and planning is the key. Timing because of the consumer's needs and wants are important otherwise there is no need for a specific product. Although everything is set up, planning is crucial due to the fact that one is buying into existence and must be carried out appropriately. This is where people fail to realize the importance.

Individuals need to evaluate themselves before going into a business that requires huge amounts of cash. One should consider if they are equipped to operate in a structured environment. They should also consider if they want to work long hours, sell products in difficult situations, and can they even afford to invest both their time and money in a franchise.

When one hears the word franchise, they automatically think of McDonald's or Burger King, but franchising is more to it than burgers and fries. Knowing the market of what one wants to get into is essential as well as knowing the season of the particular product or service. The target market for a product is also important in knowing how well it is going to sell. People do not realize this and automatically jump into something they have not really researched.

Franchising works for many because the business is already set up. An individual cannot change the way the product is made, sold or distributed. Commitment to the company is also vital. Quick decision-making, the ability to work with no supervision and self-confidence are all what an individual needs who gets themselves into franchising. Knowing that there is a tremendous amount of responsibility shows that a person has done their research and is ready to begin to commit to a length of hard of measures that will eventually pay off.

A future franchise owner may look specifically into franchises that have the fastest growth potential. There is nothing wrong with this, excluding the fact that there are other people who are already taking this factor into consideration. In terms of growth, an individual should determine whether or not there are going to be a huge amount of franchises opening and also how many are in existence already. This will let one know where their business stands in terms of revenue. If there are too few of franchises in existence, this may or may not be a good sign for growth potential.

A fast growing franchise determines one thing: success. Everyone wants to be successful in this type of business and the other way to get there besides hard work is going with a franchise that is fast growing. In some cases, this can be a bad thing because of the lack of individual attention one may receive. For example, McDonald's and Subway's restaurants are a dime a dozen. They are being built not only here in the US, but all over the world. There is not going to be a rendition of recognition for more recent establishments being built. Because of the popularity, the only incentive is the revenue one can expect to gain and not so much as recognition. (www.entrepreneur.com)

A franchise can grow quickly by selling units. Territory of multiple units is the key to faster growth if one wants to engage in this opportunity. Again, research of the company and location is the key to knowing that growth potential is in the future. The Wyndham Hotel Group boasts being the largest hotel franchiser because of the amount of units they have. They have over 6,300 hotels in the world, with ten lodging brands. (http://www.hotelfranchise.cendant.com/) This allows for growth potential in the lodging sector for the franchisee that wants to grow quickly not only in accommodations, but real estate as well.

Operating a franchise that is hotel based should also be brand based. This will draw upon not only the opportunity to increase consumer activity, but to also increase revenue. Operating under a brand based hotel franchise attracts recognition as well as identity. People will definitely come to a hotel that is franchised under a certain brand such as Cendant because of the marketing initiatives they advertise on all types of mediums. A high level of satisfaction is determined by how well the hotel franchise has been operating in the first place, so as with any start-up, it is best to research and compare where these types of franchises have benefited and how.

Because of the growth stability franchising offers, there is limited risk. People who get into franchising may come across a barrier for obtaining start-up capital, but the remainder of franchise operation is smoother thereafter. The start-up costs for opening a hotel franchise can be as high as one million dollars, but it is worth it in the long run due to the fact of the demand of the service. Quality service is conducted when operating a hotel franchise and along with that comes top dollar.

Operating a franchise overseas offers many rewards as well as growth potential. International opportunities are definitely in the food and lodging business because it is a new innovation, and these businesses are not saturated like they are in the US. There is an advantage for both the consumer and the franchiser when a franchise is operated overseas. First, in the foreign market, there is a strong need for consumer goods and services. What is developed here in the US is very limited in other foreign countries. Second, the economies overseas are often weak. With US based franchises being developed overseas, it is without a doubt that this creates revenue for the economy there, increases the value of a dollar overseas, and provides overall satisfaction for an economy where the per capita income is well below poverty standards.

Before opening a franchise in a global market though, one has to be prepared for double the research, planning and training to even begin thinking about taking this huge leap into business. There is a lot of legality to get through with certain countries. For example, China, who still operates under communism, does not allow certain media in their country. So franchisers have to be extremely careful to cut through the red tape if they want to branch out their business in a place like China. The stipulations to open a franchise here in the US are just as strenuous to open up one overseas. It is not too difficult to obtain franchising rights once a person goes through all they need to get through though. The opportunities are definitely there in terms of operating overseas because the demand is so high for goods and services that are not normally offered in these third world countries.

There are a myriad of associations that can assist one in opening up a franchise. The International Franchise Association (www.franchise.org) promotes franchising for future franchisers. The Federal Trade Commission (www.ftc.gov) keeps consumers and business owners alike informed about what business they should get into whether or not one is buying products or selling them. The American Franchisee Association (www.franchisee.org) promotes awareness for those interested in buying a franchise. The information that is provided on this website is very intense in terms of small business start-up and franchise beginnings.

With any business, people need to research and network. Because franchising is a great opportunity for people to branch out on their own and start their own business, there are also some disadvantages. When one wants to invest in a franchise for growth opportunity, one should know that sometimes too much growth could be a bad thing. The fees and overhead can be extremely high which would prevent anyone from benefiting. There can also be limitations on how large a company can grow, restrictions on purchasing and training programs that just do not work.

Most recent trends for franchise opportunities have proven to be creative. Conversion franchising in recent years, is a booming market for the franchise industry. This creates more choices for the consumer to purchase goods and services. A lot of retirees are going into franchising simply to generate a more substantial amount of income for their future. Those retirees that do go into the franchise business use their retirement funds to help start-up. This is a big risk especially for those that are using all that they have to go into business. This is just another fact that franchises do provide for a great business venture for just about anyone if they do the proper homework.

Franchising as a growth opportunity provides for great benefits and rewards in the long run. One can expect higher market potential and lower franchise fees. A fast growing franchise can also provide an opportunity to expand at a faster rate. The flexibility for franchisees allows freedom to expand in other areas creating more growth for the franchise. One does need to be careful that the product and services does not over saturate the market. This will only decrease sales and put the company at risk. A fast growing franchise has more advantages than disadvantages for the individual who is entrepreneurial, eager, and careful.

Works Cited:

www.entrepreneur.com Entrepreneur Magazine
www.allbusiness.com All Business -- Resource for Growing a Business
http://www.hotelfranchise.cendant.com Wyndham Hotel
www.franchise.org The International Franchise Association
www.ftc.gov Federal Trade Commission
www.franchisee.org American Franchisee AssociationFast growth franchises are measured in dollars and not so much as time. Money determines how quickly one is going to grow and succeed. Certain examples of a franchise being measured by money and not so much as time would be the recent expansions of hotels. People need accommodations everywhere they go whether it is for business or pleasure. (www.allbusiness.com)