The Benefits of Buying into Home-Based Franchises
Hold your horses!
Let’s talk about just what I mean when I say “home-based franchises.”
I’m not talking about companies that are referred to as “Multi-Level Marketing” companies (you may know them better as pyramid selling). Examples of those companies include: Mary Kay or Tupperware. While there is a place for these types of organizations, they aren’t franchises.
What is a Franchise?
A franchise is in essence, a business in a box. A very well-known franchise is McDonalds. Now, it’s not a home-based franchise, but it is well-known none-the-less.
The Nitty Gritty
A franchiser (most likely the founder of the company or the company itself), for a certain fee, licenses its “know-how,” procedures, brand, and rights to sell its branded products and services to a franchisee.
The franchisee, must in turn agree to buy into the franchise, pay for start-up costs, purchase equipment, and pay a monthly royalty percentage to the franchiser. The agreement between the two parties usually stipulates certain obligations on the part of the franchisee – in essence – the franchisee must agree to run their organization by the rules. So, buyer beware, if you don’t like rules and structure, or you just like the freedom to run your business the way you want to run it, then franchising probably isn’t for you.
If you are considering a franchise, you also need to investigate how each model is set up. Ask good questions about ongoing fees and how they provide training. See if they do the marketing for you or if you are allowed to market on your own. Scour the fine details!
Benefits of Franchising
All the blood, sweat, and tears were already shed.
You don’t have to discover or create a formula for success. Someone else already figured out how to create a successful business. When you buy into the franchise, you are given an instruction guide on how to set up the franchise. Many times, you’ll also receive training.
There is a perception that working from home means working less, but in reality, home-based business owners work more hours and at odd times. Franchising can make it a little easier.
- The brand name is already established.
Now, you’d probably be smart to start a franchise that’s not in your area or well-known, but a franchiser has done the marketing leg-work. A franchise most likely already has a website and social media presence. You only need to tap into what they’ve created!
- The startup & overhead costs are low.
An at-home franchise can cost anywhere from several hundred dollars to $100,000. Many are in the range of $15,000-$60,000. This may seem like a lot of money, but consider the costs of starting a major franchise like McDonalds is around $1 million, which includes overhead costs: hundreds of thousands of dollars. Also consider, you are buying into a successful, proven model.
- You may get regional preference.
Depending on the franchise, in-brand competition is limited. The franchise may give you the first opportunity at opportunities in your region, or give you a specific territory. They want to make money too and flooding a regional market, floods supply, and drops profit margin.
- You’ll have variety.
As any home-based small business, you’ll be responsible for many areas of your company: sales, management, inventory, marketing, and customer service. There are aspects the overarching franchise might manage for you (for instance, marketing), but if you are the sole person running the business, you’ll be doing a lot. Variety adds spice to life!
- You get to choose your work/life balance.
Working from home generally means you have a flexible schedule. If your children have a special event at school, you can go without jumping through loops at the office. Do you have an exercise class in the middle of the day you love? Go!
But flexible means just that: If you have obligations to customers, you still need to meet them. Missing a couple hours for a doctor’s appointment in the middle of the day, may very likely mean you are making up the work at night.
- You may not have a Commute.
Depending on the type of home-based franchise opportunity you are considering, you may not even need to leave home.
There are a variety of home-based franchise opportunities out there. To get started in your exploration, Fit Small Business and Franchise Gator both have a listing of several home based opportunities to explore. These certainly aren’t the only ones out there, so think about what you want to do and see if anyone has created that opportunity already. If they haven’t, who knows? Maybe you’ll start your own franchise opportunity for someone else to buy into!
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