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A Franchise May be the Best Way to Start a Business: Benefits of Franchising

Jan 25, 2021

Opening a franchise is a well-recognized path to small business ownership. Essentially, owning a franchise allows you to open a new location of a pre-existing branded business, which you then own and manage with support from the parent company. There are many benefits of franchising, most notably the stability and support provided by a well-known corporation with a documented track record.  Franchises remain one of the fastest growing types of small business even in the wake of the Covid-19 pandemic: 2020 saw record numbers of new franchise applicants. We will break down some of perks of owning your own franchised small business.

Brand Power

Clearly, the name recognition that accompanies a franchise is one of the biggest advantages. Customers don’t like to spend their time researching reputable businesses and are more likely to patronize a brand they recognize and associate with quality. Clients who need a tax-preparation service, for example, will be more likely to trust a well-known franchise with their hard-earned money than an unknown name like “Smith’s Tax Prep.”

Relationships with Suppliers

All businesses exist to sell a product and establishing supply chains can be costly and time-consuming. Franchising allows you to access pre-existing relationships with suppliers. This is crucial for businesses that rely upon physical products, like automotive service franchises. Tapping into a proven supply line can help you provide high-quality materials to your customers with lower sourcing costs when you take advantage of deals the parent company has cultivated with manufacturers.

Advertising Support

Franchised businesses have the benefit of local, regional, and national marketing initiatives that are consistent and proven to be effective. Private shipping carrier UPS, for example, offers ongoing business consulting that includes advertising support to franchisees. This prevents individual business owners from wasting time and resources on building a marketing strategy from scratch.

Tax Benefits

Some of the lesser-known benefits of franchising are the tax incentives. For example, the initial franchising fee can sometimes be tax-deductible. Additionally, the balance between up-front fees and ongoing royalty payments affects how much you can deduct from your tax payments over time, often making your business more profitable after the initial start-up phase.

What are the Best Franchises to Start in 2021?

There are a wide range of franchise opportunities available. The best fit will depend upon your previous experience and skills as well as the type of work environment you prefer. Here are some options based upon growing franchise industries in the coming decade:

  • Automotive Suppliers – these include stores like Napa Auto Parts and are a great fit for those with in-depth knowledge about vehicles.
  • Private Mail Centers – Well-known brands like UPS and Mail Service offer plenty of customer interaction.
  • Tax Prep Services – With seasonal schedules, franchises like H&R Block, Jackson Hewitt, and Liberty Tax Services often have slower hours in the summer.
  • Cleaning and Restoration Services – With a growing market presence, business like ServicePro benefit from their name recognition.

How to Start a Franchise

The steps to starting a franchise are different for each company, but they all include an initial application, a franchise fee paid to the parent company, and an initial source of funding to finance start-up costs like premises, employee training, and product purchase. Many franchises require a relatively low startup cost and an application for a small business loan can take under a minute to fill out. Keep in mind that franchises benefit from an entire network of branded businesses that are invested in your success.

Final Thoughts

There are many benefits of franchising, including ongoing training and professional development opportunities. Researching franchise opportunities that align with your skills and experience and finding out the funding available to you are good places to begin exploring franchise ownership.


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