Many individuals have the desire to open their own business but are hesitant to leave their current jobs. While starting a business is always risky, there are some businesses that will give you a greater chance of success. Franchise businesses, in particular, offer many benefits to new business owners to help them become profitable. In this blog post, we will provide tips on how potential business owners can start a profitable franchise business.
Who Is Franchising For?
The first thing to consider when thinking about opening a business is whether or not franchise opportunities are a good fit for you. Some people might not think that they are cut out for buying a franchise. But we are here to tell you, that anyone with determination and a good work ethic can be a successful franchisee.
Franchises offer the opportunity to open your own business with a lower, more reasonable financial investment. That creates a lower barrier to entry in whatever field you are pursuing. Additionally, a franchise offers diverse revenue streams as business owners can have a salary, gain profits from the business, and develop a strong asset. And one of the biggest benefits a franchise can offer is career freedom. Franchisees can set their own schedule and dictate the future of their business.
At the end of the day, you can be a successful franchisee. The next logical question you should consider is: What is the most profitable franchise to own?
What Makes a Franchise Opportunity Profitable?
A franchise business is a smart and profitable option for individuals who want to become business owners. Here are some of the ways that a franchise could be more profitable than a startup business.
Franchises give business owners a name, logo, and complete brand from which to build their business. This brand could be as well-known as McDonald’s, with a loyal customer base already established. Your business can automatically gain credibility by becoming part of a system that has years of experience. This can help you hit the ground running when you open your business instead of doing the groundwork for a startup.
One of the benefits of joining the franchise system is that there will be a template for starting your business. The most profitable franchises have an existing, successful model for getting new franchisees up and running. The franchisor has experience in the industry and in opening new businesses, and it will behoove you to follow their model and rely on their advice and resources.
At Caring Senior Service, we have over 28 years of experience in senior care. Our franchise system is streamlined to ensure that new franchise owners can get their business up and running as soon as possible, often within 60 days. Along the way, our team at headquarters provides support and training to franchisees. We also provide the tools that franchise owners need to succeed, including access to our proprietary Tendio software.
Franchisors have access to tools and resources that can help them perform thorough market research before ever opening an area up to franchisees. This research can give franchisees more confidence that there is a demand for their product or service. When starting a business, this information may be expensive or impossible to obtain.
Economy of Scale
Not only can a franchise system provide you with resources and insight into the market, but you can also obtain financial discounts as a result of a franchisor’s strength in numbers. The more franchisees that join the system, the better these discounts and opportunities can be.
As you can see, a franchise business can offer a lot of advantages that can make them more profitable than a startup.
Access to reliable market research
Conduct or pay for market evaluations
Strength in numbers that can reduce fees and prices from vendors
Build new relationships with vendors, often without discounts
Established brand name
Marketing efforts to build the brand
Proven business model
Create and establish a business model
Choosing the Right Franchise to Invest In
The next step in starting a profitable franchise is determining which franchise system to be a part of. Here are some tips to guide you when making this decision.
Choose the Right Industry
Franchise businesses are available in many different industries, so part of making the most profitable franchise for yourself is buying a franchise in the right industry. But that industry may be different for each person depending on what you’re looking for in a business. For example, if you have passion for helping seniors and making a difference in the community, then a home care franchise might be a good fit. If you’re looking for a fast-paced work environment, then maybe a quick-serve restaurant chain would be a better fit.
You should also consider current industry trends. Some industries have more potential than others. For example, the senior care industry is expected to continue to grow exponentially over the coming decades. You’ve likely seen franchises rise and fall quickly over the years. Frozen yogurt and fitness concepts come and go with regularity. Invest in a profitable franchise that has lasting power.
When considering different industries, you may want to examine your own skill sets and interests.
- Do you like interacting with clients on a regular basis?
- Are you an effective manager?
- Are you skilled at sales and relationship building?
Choosing the right industry from the beginning can help you achieve your goals and achieve profitability as a business owner.
Do Your Research
Once you have selected the industry in which you want to start your business, you should research different franchise opportunities. Carefully vet each of your options to ensure that they are a good cultural and financial fit for your business. This step is crucial to ensure that your franchise can succeed and remain profitable for years to come.
During this phase, you may receive information from the franchisors. You may visit their headquarters and speak with franchisees about their experiences with the franchisor. Before you sign a contract with any franchisor, you also have the right to review the franchisor’s Franchise Disclosure Document, which can give you additional insight into business performance. This document will include information like the initial franchise fee, rules and restrictions, the franchisor’s litigation history and other information. You will also want to learn what exactly you will get in return for your fees.
Consider the Fees
One of the main concerns of potential franchise owners is the royalty fee. A royalty fee is a recurring fee that the franchisee pays the franchisor for access to their intellectual property, business model, and resources. New franchisees are required to pay an initial franchise fee and then continue paying royalty fees as long as they are part of that franchise system. Usually the royalty fee is a percentage of sales.
When opening a franchise business, you should consider the royalty fee and how that will impact your bottom line. You may want to choose a franchise model with a lower royalty fee — even if it has a higher initial fee. Especially if you are looking for high financial gains in your franchise, taking the royalty fee into consideration can help you with your business planning and expectations.
You also want to evaluate the services that the franchisor offers in exchange for these fees. Make sure the price is worth it. You should understand all the services and products the franchisor provides. You wouldn’t want to choose a franchise based solely on a lower royalty fee because you may end up paying more to third-party vendors.
Make sure to learn about any other fees the franchise may charge. Many franchises have required vendors and suppliers, who may have additional fees. Some franchises are the sole approved vendor for certain purchases your business will have to make. Review the financial statements of the franchisor to gain a better understanding of how they generate income. If a large percentage of their income is generated by franchisee purchases, you should investigate that further.
Is Franchising Right for You?
After reviewing this guide, we hope that you realize that a franchise business can be a profitable and feasible option for you. It can give you an established business model and brand to propel your business into success instead of spending years building a platform and name recognition for a startup. A franchise opportunity can give you career freedom you have always wanted without having to sacrifice your entire life to get a startup off the ground.
To learn about how you can create a profitable franchise business in the home care industry, reach out to Caring Senior Service. We would love to talk with you about your options.
And if you’re not convinced that a franchise business can be a profitable business option for you, check out our resource Franchise vs. Start-Up.