The Benefits of Buying a Franchise: A Smart Solution to Start a Low-Risk Business

Starting a business from scratch requires a lot of time, effort, and of course, capital to build a brand, set up operational systems, and attract customers. Amidst those risks, franchising emerges as an attractive alternative for aspiring entrepreneurs who want to step into the business world. With an established system and a well-recognized brand, this business model offers various advantages that conventional businesses don’t have. What are they? Let’s find out!

What Is a Franchise?

According to Investopedia, a franchise is a business model in which the owner of a trademark or business system (the franchisor) grants rights to another party (the franchisee) to operate a business using the brand name, products, operational systems, and proven business support.

In other words, franchising allows someone to run their own business by “leveraging” the reputation and established systems of an existing brand.

In return, franchisees typically pay an initial fee and ongoing royalty fees to the franchisor. These fees serve as compensation for access to the brand, business know-how, standard operating procedures (SOPs), training, and operational support provided.

The International Franchise Association (IFA) adds that franchising is not merely a buyer-seller relationship of a brand, but a long-term business partnership. To maintain brand consistency, franchisors provide comprehensive guidance on how to run the business according to the parent company’s standards—from product offerings, store layout, and customer service standards, to marketing strategies.

Because the franchise agreement is a legally binding contract, franchisees are required to uphold the brand’s reputation and quality standards. Despite these obligations, franchising remains a popular choice as it offers a faster path to starting a business with lower risks compared to building one from scratch.

Advantages of Franchising Compared to Starting a Business from Scratch

Starting a business from scratch may give you full freedom, but it also comes with many challenges. On the other hand, franchising offers a safer and more systematic shortcut for anyone who wants to own a business—even without prior experience. Here are 15 key advantages of franchising:

1. Proven Business Model

   One of the main appeals of franchising is its established and proven business system. From standard operating procedures (SOPs) and workflows to marketing strategies, everything is already available and ready to implement—significantly increasing the chances of success.

   
   

2. Well-Established Brand

Franchising provides direct benefits by allowing you to use a brand name that is already widely recognized and trusted by consumers. This speeds up the process of attracting customers and expanding the market since they already know what to expect from the products or services offered.

3. Lower Risk of Failure

   Statistics show that franchises have a lower failure rate compared to businesses started from scratch. This is because their systems have been tested across various locations and market conditions.

   
   

4. Support and Training from the Franchisor

   Franchising is not just about buying the rights to use a name—it also includes initial training, operational guidance, marketing assistance, site selection, and ongoing consultation. Some franchisors even provide complete packages that include equipment, suppliers, and management systems, so you don’t have to build everything from the ground up.

   
   

5. Established Customer Base

   Franchises come with loyal customers who already know the products. This means you don’t have to build a customer base from scratch—which is often the most challenging part of starting a business.

   
   

6. Collective Purchasing Power

   Through the franchise network, you can purchase raw materials and equipment at lower prices since bulk purchasing is handled by the franchisor or through official partners. This reduces operational costs and improves profit margins.

   
   

7. Easier Access to Financing

   Because franchises generally have a proven track record of success, banks and financial institutions are more confident in granting loans. They see franchisees as a safer investment compared to new, unproven businesses.

   
   

8. Higher Profit Potential

   Successful franchises tend to achieve higher profitability compared to independent businesses. The combination of a strong brand, operational efficiency, a large customer base, and integrated marketing systems helps generate faster and more stable returns on investment.

   
   

9. Ready-to-Run Business

   The most difficult stage of building a business is usually at the beginning. With franchising, you can bypass much of this stage since all systems are already set up and ready to use.

   
   

10. Exclusive Territorial Rights

    Many franchises grant franchisees exclusive rights to operate within a specific territory. This means no other branches of the same brand can open in your area, minimizing internal competition (franchise encroachment).

    
    

11. Easier Business Scalability

    Franchise systems allow you to open multiple units with relative ease since all systems, SOPs, and support are standardized and readily available. In other words, franchising provides a faster and more structured growth path.

    
    

12. No Prior Business Experience Required

    For beginners, starting a business can feel overwhelming. But within a franchise system, franchisors provide comprehensive training, allowing you to run the business successfully even without prior experience.

    
    

13. Ability to Compete with Bigger Players

By joining a franchise network, small business owners gain strong branding support as well as proven marketing strategies. This allows you to compete directly with bigger players in the same industry.

14. Marketing Support from Headquarters

    Franchisors often run nationwide marketing campaigns across various channels such as TV, social media, and digital ads. As a franchisee, you automatically benefit from these campaigns.

    
    

15. Access to Franchisee Networks and Collaboration

    Within a franchise system, you become part of a business community. This enables you to share experiences, strategies, and solutions with fellow franchisees. Such interactions create a supportive and collaborative business ecosystem.

    
    

Franchising offers many advantages that are hard to achieve when starting a business from scratch. No wonder this business model continues to gain popularity, especially among small and medium-sized enterprises (SMEs) looking to grow quickly with lower risks.

If you’re planning to manage a multi-outlet business or a franchise, download the Labamu app and take advantage of its Franchise features. From monitoring stock across branches and generating comprehensive sales reports to running an integrated POS system—everything is made easier. Download it now on Google Play or the App Store!