The advantages of investing in a franchise

October, 13 2020

Do you know what the advantages of investing in a franchise are? Do you know the benefits of this business model?

When we are looking for the best place to invest our hard-earned savings, we must analyze the pros and cons of our different options. 

We will now tell you why franchises are a good investment.

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The advantages of investing in a franchise

Here we’ll take a look at what franchises have to offer, as well as how to be a successful entrepreneur.

1. Avoid risks. This is certainly one of the most important factors to consider when investing; no one wants to lose money. A franchise allows you to minimize the risks as the franchising company gives you all the knowledge about the business. This is not the case when choosing to start a business from scratch, where a bad decision can lead to ruin.

2. Invest in a consolidated brand. This is another important consideration,  as people usually return to places they are familiar with to consume products or services. In addition, the franchise owners have run marketing and advertising campaigns that ensure that the brand becomes known in the places where it operates.

3. Constant training and advice. The franchisor has different training programs available, which you can use to learn about the business quickly, as well as having constant, high quality support to advise you about how to be profitable. They also advise you on how to choose the ideal location for the business to ensure you have a high number of customers. 

4. Assured success. The majority of franchises can expand their business because they have proven success. These franchises have been opened by many entrepreneurs like you who have been extremely successful and have hit all their targets. 

5. Lower investment. Another important reason. We all want to make money with the smallest investment possible. Investing in a franchise assures profit. You have to pay a starting and monthly fee but it's still often much less than if you open a business on your own and make a mistake along the way.

6. Turnkey model: the model used by the Jeff franchise. This consists of handing over the premise ready to open. You simply have to secure the premise in the area you want to operate in, the rest is dealt with by the franchisor (remodeling, implementation with supplies and machinery, decoration, etc.)  

7. Territorial exclusivity: franchises always divide cities into territories they want to operate in, when you buy one of the franchises, you will have exclusivity in that territory. In other words, no one else in the franchise can open another store there, so you will not have competitors of the same brand.

8. Ease of financing: If there is a need for financing, banks tend to approve loans more easily to projects that are well known and have a successful track record. 

9. Win-win situation: and finally, buying or investing in a franchise is beneficial for both parties. The franchisee is able to open a business with a powerful brand and, as the brand is already positioned, they will receive more customers than if they had opened from scratch. The franchisor is able to expand their business and its brand in an "easier" way, without having to manage each of the premises itself and, they increase monthly income through franchisee payments. 


What is a franchise?

A franchise is understood to be the relationship between two parties, in which one of the parties pays a certain amount of money to the other in exchange for the right to use its brand. 

This type of contract allows the franchisor to grant a license to the franchisee for not only the exploitation of the brand consolidated in a particular market, but also to use its business model, using the brand to be able to distribute goods and / or services under specific guidelines that the franchisor may have in exchange for a series of financial compensation.

How does a franchise work?

The processes involved in obtaining a franchise vary greatly depending on the type of franchise and on its characteristics. However there are some general rules: 

  • The franchising company delivers a franchise offer notice circular, which includes the most relevant data of the brand, (benefits, investment, know-how).
  • A contract is signed, explaining the time, geographic area of ​​exclusivity, the royalty (fee paid to the franchising company).
  • There is also the turnkey model, in which the franchise is handed over ready to operate, there is a complete adaptation of the premise.
  • Afterwards, the different franchise manuals will be received so that adaptation can be carried out in a homogeneous way.
  • The franchise also involves the transmission of the full range of knowledge and experiences from the franchisor to the franchisee. This will allow the latter to operate the business effectively and in a uniform manner with commercial and administrative methods applied in different markets.

Discover how to open your own business


Franchising 101

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