Reasons Why Owning A Franchise Is The Best Investment Opportunity
Opportunity India Desk
Jun 26, 2020 -
3 min read
Did you ever think about investing your hard-earned money on some stock exchange or property? A lot of people do it, but there are many risks involved in it. At a snap of the finger, the stock market and the rate of your property gets down, and you can lose all your hard-earned money!
Franchising, on the other hand, seems like a better investment opportunity for that it is most likely to gain profit right from the beginning of the business if the business model is proven. Buying a franchise business is one of the most sought-after options by the budding entrepreneurs due to several benefits that it offers.
Here are some of those benefits that make franchise business a better investment option than any other investment opportunity.
Starting a business from scratch is not everyone’s cup of tea. It requires different skills such as leadership and managerial skills, and not everyone is born with these skills (and of course, huge money is also required). Buying a franchise gives all of them the opportunity to become an entrepreneur by investing lesser money than it will require starting the business. This is one of the greatest assets of becoming a franchisee, you become an entrepreneur just by investing your money in someone else’s business idea.
When you invest in someone’s proven system, the chances of losing your money decreases. A mature, well-designed and managed franchise system is a system that has been accepted by the masses and hence, doesn’t seem to fail if you fulfill the requirement of the franchisor. Hereby, your money is in good hands and is likely to be multifold in a proven franchise system.
While starting a new business, you could make several mistakes as you are not familiar with the operations of a business at first. Hence, there are more chances of you drowning your invested money when you start a business afresh. However, if you choose a franchise business venture, you have a proven model of business, which has been filtered through many mistakes done by your franchisor. By this means, the franchise lets you do fewer mistakes, making you save your money.
Franchise businesses are much easier to finance than independent businesses. This is because the banks wish to see business plans to show that you can service your debt. With the franchisor’s experience and their support, franchisees can develop professional business plans for leasing companies and other lenders.
The time will come when you will have to exit the franchised business, either by retiring or on your wish. You do not have any claims on your franchisor’s equity except for the value it adds to your business during your term. So, when you exit the system (as long as you are able to transfer your business to a new buyer), your exit value will be higher than a new independent business of the same kind. So, you are getting much more (when you leave) than what you invested in the business in the initial phase.
