Franchises — those businesses with recognizable names have long represented a safe investment for people who want to work for themselves.
The U.S. franchise sector the highest monthly number of jobslast month, as well as in the past year, bringing the annual number of employment opportunities in the market to more than 175,000, according to a report from the ADP National Franchise Report.
Although these numbers vary from month to month and can fluctuate rapidly, the trend is upward. And a local economy expert suggests that these trends are underlined by local and state markets.
“Franchises have become an increasingly popular way of starting a small business,” said Tom Binnings of Summit Economics, adding that he “would be surprised if franchising locally deviates much from national trends.”
Becoming a franchisee
For many aspiring owners, franchising a nationally recognizable and competitive business can be simpler and sometimes more cost-effective than starting an independent small business from scratch.
The cost of franchising a business varies from market to market due to availability and the real estate market. Franchising can become even more expensive because of royalty payments and continual costs such as bills, payroll and maintenance.
Many franchise stores are essentially pre-packaged business ventures. And even though the upfront and ongoing fees can sometimes be substantial, there are some very fundamental benefits to becoming a franchisee.
The franchisor provides a “very detailed start-up formula.”
The franchisee receives “more widespread branding with advertising dollars committed to promoting the brand regionally and nationally.”
The franchisee is faced with lesser risk than small-business owners, especially in startup mode.
And although the costs can be substantial, the franchisee is also paying for reduced financial risk and the use of consistent branding. The reward is adopting a brand.