Investing in a franchise business may make sense for you, especially if it’s your first step into business ownership. By selecting the right franchise, you can reduce some of the common challenges associated with starting a small business. By leveraging the franchisor’s proven model and systems, you should ideally be able to mitigate many of the risks associated with opening a new business. From initial site selection to day-to-day operating best practices, a strong franchise will provide significant benefits to help you succeed. However, there are three critical benefits that I believe you should consider when evaluating and selecting a franchise that is right for you: brand, leverage and systems.

The brand:

What is the brand value of the franchise in your target geographic market? The brand may have a large presence in the Northeast, but that may be of little or no value to you if you’re considering opening your first unit in the Southwest. A large part of what you are paying for is brand recognition that the franchisor has ideally already invested in and developed.

A strong, positive and established brand is one of the greatest advantages of franchising. It would be extremely difficult to build a brand for yourself to the level that a successful franchise can achieve. A great brand should have a positive value in the eyes of the customers or clients it is trying to attract. Important considerations on this point include:

• What is the value of the brand in your market?
• Does it have a positive reputation, or have there been problems in the past that have tarnished it?
• Is it a tired and dated brand, or is it fresh and relevant?
• If the franchise you are considering is just getting started, or has limited or no presence in your area, then you need to assess its ability to execute. What are your plans to build a brand that will benefit your location over time?
• Since other franchises are opening in the same area, is there a budget and plan for marketing the brand image specifically?
• What is your monthly cost to participate in the development and maintenance of the brand (this is usually the marketing component of the monthly fee owed to the franchisor)?

Deductible leverage:

A successful franchise system must provide opportunities to take advantage of economies of scale that simply would not be possible or available to a small independent business. These leverage points can include everything from preferential access to loans to the combined purchasing power of the entire system.

When I owned multiple units of a local pizza franchise in the 1990s, for example, I was able to buy cheese and other ingredients at a much lower price through the franchisor than I could have negotiated as an independent operator. Advertising is another area where franchise leverage can provide an advantage. You may be able to budget for an effective TV or radio campaign as a franchise group, for example, that you couldn’t afford as an independent business. The leverage opportunities offered by a franchise may include:

• Preferential access to loans (banks may prefer to lend to established franchises with which they have experience).
• Reduce operating costs through group purchases (of raw materials, equipment and other operating supplies).
• Cooperative and leveraged advertising campaigns.
• Generation of leads through websites or call centers.
• More favorable consideration by owners who value the reputation and historical success of the franchise.
• Network of fellow franchisees to provide advice and moral support.

The systems:

Tea systems quality offered by the franchisor should be the most important consideration in your selection of a franchise. Systems include everything that is used to operate the business in a standard and repeatable manner. It includes initial start-up and training, operations manuals, and ongoing best practices that drive continuous improvement in the business model. A comprehensive and proven system is what allows a self-managed companyunlike an operation that relies on a few key people who have all the knowledge in their heads.

Systems are at the core of any successful franchise. Without effective, proven and repeatable systems there is no franchise. The benefits of a great franchise system typically include:

• A proven and repeatable business model.
• Less time to open your business (including assistance with site selection and design).
• Comprehensive initial training (including operations and marketing).
• Little to no direct experience is required (the franchisor teaches you how to bake the cookies).
• Continuous support and innovation (including improvements to systems).

Undoubtedly, there are other important benefits and criteria to consider when evaluating a franchise, including its track record and track record, its management and support team, protected territories, and how the business concept fits with your lifestyle and vision.

As with any business opportunity, there is no guarantee of success and there are trade-offs. When you own a franchise, you must adhere to its policies and structure, and you are committed to the franchise for the duration of the franchise agreement, often 10 years or more. This can create a conflict with your desire to be your own boss and have complete control over how you run your business. You are also exposed and affected to some degree by the way other franchise owners operate their units and its potential impact on brand reputation.

There is no definitive or reliable data on the success rate of franchises, despite cited and discredited statistics to the contrary. That’s due, in large part, to the fact that franchises vary widely across many industries. There are thousands of franchise models available today. You should carefully consider the value you can get from franchising, compared to starting your own independent business. With the right expectations and planning, a franchise that meets your needs may be the best fit for you. A franchise that offers a strong brand, collective leverage opportunity, and comprehensive, proven systems can help you realize your dreams of being a successful business owner.