It’s that time again — time to make your next New Year’s resolutions. You’re already a great manager and know how to set good leadership resolutions. In fact, you’re so good at running a business that you’ve been thinking about starting your own business. But how? Isn’t it risky to leave your stable job and create something totally new?
What if we told you that there’s a way to have it all — your own business that comes with built-in loyal customers from the beginning? What if you made it your New Year’s resolution to start a new franchise?
In this article, we’ll walk you through everything you need to know about starting your own franchise, including what franchises are, how they work, and how to start one this New Year.
What is a Franchise?
A franchise is a particular type of business model that combines the excitement of running your own business with the stability of using a trusted brand.
In a franchise model, one company (the franchisor) allows another business owner (the franchisee) to use company trademarks and branding to sell the company’s products and services.
Where Do Franchises Come From?
The earliest franchises go back to the Middle Ages when governments and nobles allowed certain people to perform functions on their behalf, such as collecting taxes, holding markets, and running commercial ventures. These people paid royalties in exchange for protection from their local lord — essentially, the right to operate exclusively in a particular territory.
A few centuries later, Isaac Singer — inventor of the world-changing Singer sewing machine — created the first modern franchise model. Interested business people would pay Singer a licensing fee for the exclusive right to sell Singer sewing machines. Since everyone wanted a sewing machine, the franchise model worked for everyone. Local business owners made money by focusing on sales and growing the customer base, while Singer used the money from licensing fees to grow his manufacturing capacity.
Soon after, McDonald’s added an important innovation to the franchise model. Not only did McDonald’s start selling franchises like Singer, but the company also started including training and business practices as part of the franchise. As a result, customers could walk into any McDonald’s franchise and expect the same experience, from decor to food offerings.
What Kinds of Companies Use Franchises?
The short answer is, “more than you think.” In fact, almost every major type of American chain relies on small business owners to run their franchises.
Here are just a few examples of industry segments that use franchises:
- Auto repair and insurance
- Auto dealerships
- Fast food and casual dining
- Hotels and hospitality services
- Cell phone service providers
- Home repair
- Salons and spas
- Fueling stations
When you walk into a major national or regional chain, chances are that the store is run by a local small business owner — not the big company. It’s easy to see why franchising is a winning bet for today’s entrepreneurs.
How Does a Franchise Work?
In a franchise model, the franchisee is allowed to open a new business that looks like a branch of the franchisor.
The franchisee gets full access to the franchisor’s trademarked materials, including:
- The right to use the franchisor’s brand name
- Logos, slogans, and signage
- Mission statement
- Marketing materials
- Operations manuals
- Company training
- Other proprietary materials
In fact, a well-run franchise looks just like any of the company’s other franchise businesses. That way, customers walk in already expecting the same great service, no matter which franchise they visit.
Usually, the franchisee gets an exclusive geographic territory to cover as well. This helps maximize the customer base for each franchisee.
In return, the franchisee pays the franchisor a franchise fee. Beyond the franchise fee, the franchisee is free to keep and manage business revenues and profits, just like any other small business owner.
In other words, franchise owners can enjoy the best of both worlds — the freedom to run their own business and the built-in customer base that comes with an established brand.
Why Do Companies Use Franchises?
You might be wondering why companies don’t just run their own branches and stores. After all, wouldn’t that mean more profit for the company?
The reason is that building a major brand is very different from running a small local business. While both skills are critical to achieving commercial success, few companies have the resources to manage both — especially when there are hundreds or even thousands of locations. Rather than stretching themselves too thin, companies use franchises to “work smarter, not harder.”
The franchise business model creates a win-win situation for large companies and small business owners. The franchisor can focus on the big picture and maintaining the brand. At the same time, small business owners can focus on the day-to-day details of running the store and doing what works best for customers in their local area.
Who Can Become a Franchise Owner?
If you’ve ever dreamed of being your own boss and running your own small business, then you can become a franchise owner! You don’t need a particular college degree or certification to own a franchise.
That said, here are some of the most helpful qualities of a successful franchise owner:
- Self-motivation and self-discipline
- Good workplace leadership
- Communication skills
- Attention to detail
- Customer-oriented mindset
Once you start working with a franchisor, you’ll get all the company training you need to get started. At Confie, we make sure that franchisees have the skills they need to represent our brand. After all, when you succeed in your franchise, we succeed too.
How Long Does It Take to Start a Franchise?
According to the US Small Business Administration (SBA), starting a franchise can take between three to four months to finalize a franchise agreement and another two months to open your new franchise to customers.
So, if you’re thinking about starting a Confie franchise as a New Year’s resolution, the time to start is now. That way, you’ll be open just in time for summer, when more people are on the road and looking for affordable car insurance.
Start Your New Year Right with a New Franchise!
Now that you know a lot more about franchises, you’re probably wondering, “Where do I sign up?” At Confie, we help small business owners take charge of their own careers by setting up franchises all around the country. Between Confie’s commitment to people and your dedication to serving customers in your local area, we can work together to bring success and positive change to your community.