Exploring opening your own business and wondering if a franchise makes the most sense? Franchises are smart investments due to lower start-up risks but ultimately, your rate of return depends on several factors. See if franchising is a good investment for you.
A New Opportunity
In the wake of the COVID-19 pandemic, millions of people have been quitting their jobs in what has been called The Great Resignation. While some are simply looking for higher pay, others are seeking jobs that offer a better work/life balance. For many who worked from home during the pandemic, the prospect of returning to the office is undesirable. Rather than recommitting to long commutes and the sterility of working in a cubicle every day, a growing number of people are choosing to start their own businesses.
If you’re one of those professionals considering leaving your current career to open a small business, you’ve probably been asking a lot of questions. Is it better to start a company from scratch or invest in a franchise? Are franchises good investments? How does the return on investment for a startup compare to a franchise ROI? In reality, there are many benefits to buying a franchise, especially when you go with a well-established brand such as the ones that are part of Home Franchise Concepts (HFC). Of course, starting any business comes with risks, and buying a franchise is no different. So, instead of asking, “Are franchises good investments?” you may want to ask, “Is investing in a franchise the right choice for me?” Here is some objective information to help you answer that question.
What Factors Make Franchises a Good Investment?
Before you get serious about starting an independent business, be sure to read “The Top 12 Reasons Startups Fail” from research firm CB Insights. This thorough study provides examples of the pitfalls of independent business ownership, including interviews with owners and employees of now defunct businesses. Interestingly, most of the startup problems detailed in the article can be avoided when you invest with a franchisor like HFC. That’s because HFC removes all the guesswork from starting a new business. We’ve been helping people like you open new home services businesses for decades. In fact, HFC has more than 30 years of experience, and when we were acquired by JM Family in 2019 we became part of a company that has more than 50 years of franchising expertise. We put all of that experience to work for you in a number of ways.
One of the greatest benefits of investing in a franchise is that your new business will offer a tried-and-true product and will have instant name recognition from day one. At Home Franchise Concepts, we have eight premium brands you can choose from:
- AdvantaClean, an industry-leading home restoration franchsie
- Aussie Pet Mobile, the leader in caring and convenient mobile pet grooming
- Bath Tune-Up, offering curated design concepts for every level of bathroom remodeling
- Budget Blinds, the largest window coverings franchise in North America
- Concrete Craft, the #1 concrete coating franchise, transforming homes inside and out
- Kitchen Tune-Up, specializing in quick and affordable kitchen updates
- Tailored Living, a whole home organization franchise providing customized storage solutions
- Two Maids and a Mop, a trusted residential cleaning franchise rapidly expanding across the U.S.
Proven Business Models
Having a flawed business model is one of the main reasons that startups fail, but you won’t have to worry about that if you buy an HFC franchise. Our brands are consistently ranked as industry leaders in on Entrepreneur’s Franchise 500 annual reviews. These high marks are given in recognition of the strength and stability of the HFC franchise business model. No matter which of our companies you choose, you’ll find that we’ve already done the hard work of researching markets, securing quality vendors, figuring out how much inventory you need to stock, assessing costs, etc. All you have to do is follow the proven formula we give you.
Access to Vendors
Pricing and cost issues force many startups out of business, and the supply chain challenges that have emerged in the wake of the pandemic make it more important than ever to have access to reliable vendors. When you become part of the HFC family, you gain an advantage that most “mom and pop” shops don’t have—you benefit from our long-standing relationships with our suppliers and the lower rates that we’ve negotiated for our franchisees.
Many startup failures could be avoided if the owners were better prepared to run a business. When you invest in one of HFC’s brands, you won’t have to worry about a lack of preparation. Even if you’ve never remodeled a bathroom or groomed a dog, we’ll teach you everything you need to know to operate a successful business. We provide robust initial training programs before you open and ongoing education once you’re in business, so you’ll be ready to offer the exceptional products and high level of service that HFC brands are famous for.
What Are the Potential Disadvantages to Investing in a Franchise?
Just as there are advantages to buying a franchise, there are also some potential disadvantages, depending on your strengths and goals and which kind of franchise you choose.
Franchise Standards and Regulations
Franchisors build and maintain brand consistency by having specific guidelines and regulations that all franchisees must follow. When you sign a franchise agreement, you’re legally bound to adhere to those regulations as you run your business. For instance, you may be required to use certain vendors, operate during set hours, use specific advertising and marketing materials approved by the franchisor, etc. Some people find these regulations too limiting and would prefer to have ultimate authority over every aspect of their company’s operations.
All franchises charge fees. After all, the franchisor has worked hard to create a successful brand, and you’re paying for access to their extensive knowledge and brand recognition. In addition to an initial franchise fee, you may have to pay royalties, advertising fees, etc. Some franchises can have initial costs as high as $500,000 to $1 million, especially fast food chains such as McDonald’s. That is simply too much money for many entrepreneurs to risk in the event that the franchise rate of return doesn’t pay off.
Learn More about Home Franchise Concepts Brands
While you’re considering a franchise versus an independent business, be sure to take a look at all eight of our excellent brands. Besides the benefits listed above, we have extremely reasonable initial investment costs and offer in-house financing to qualified candidates. Contact us today to learn more about our franchise ROI and all the advantages that come with being part of the HFC family. When you ask, “Are franchises good investments?” we’ll show you why, with us, the answer is “Yes!”