5 Reasons Why Franchises Are among the Top Business Models

There are many successful business models in operation around the world. Some are based on sole ownership, some of them are based on joint ownership, while others are based on transferring a tested and proven method of running a business to other entrepreneurs. This latter business model is named franchising.


A franchisor is usually a highly innovative entrepreneur who has created a successful business which can be opened and run successfully in any other location. Over the years, many successful franchises have grown to become worldwide-known international brands, such as McDonald’s, Jims, the Hilton Hotels, or RE/MAX.

If you consider going into business, starting out as a franchisee is a great idea. As we will show you below, the franchise is one of the best business models for new entrepreneurs. It can either be a long-term pursuit, or it can help you hone your managerial skills in preparation for opening your own business later on.

These are the five reasons why franchising is one of the top business models:

  1. Easier Access to Financing

As a private person trying to persuade a bank to finance your business idea, you have rather small chances unless you have lots of valuable assets to bring as collateral. However, when you apply for a business line of credit to open a franchise, you have much higher chances to receive an approval.

Franchises are tested business models with a high chance of success. Banks know that, and the more well known the franchise you pick, the greater your chances will be to get a quick approval and a larger loan amount.

  1. Training and Assistance

Franchisors take training very seriously. They want their franchisees to succeed, because this means that the value of their brand will also grow. This is why franchises have very detailed training programmes that teach franchisees everything they need to know, from daily operations to keeping the accounting books, hiring personnel and implementing successful marketing strategies.

Franchisees also receive assistance in selecting the ideal location for their store and the best suppliers for stocks and inventories.

  1. Ongoing Education

Being part of a group means that you have access to the latest management and marketing techniques implemented by the franchise chain. This is one of the best advantages of running a franchise: you will have the chance to learn the latest and most effective managerial skills, without having to put your business operations on hold.

  1. Customer generation at Local and National Levels

Franchise chains have a strong financial power, allowing them to advertise and market at a national level, which would not be accessible to you as a sole entrepreneur. This means that you will get customers walking in your store without any effort from you, except from following the instructions given by the franchisor.

  1. Easy to Estimate ROI

Return on investment (ROI) is the key metric of profitability. For new and untested business ideas, you can approximate the ROI you may get during the first, second, third year of operations, and so on. In case of franchises, the franchisor has already collected data from other shops situated in a similar location to yours. This is a huge help in planning and estimating your income and deciding whether this business opportunity is right for you and your family.

There are many other reasons which established the franchise among the top business models, each of them powerful and relevant to potential entrepreneurs. If you feel the impulse of going into business but are not sure whether your own idea may be successful, the franchise is the right option for you.