Franchising News

Brand Strength Is A Primary Draw For New Franchisees, Says New Study

Written by Tim Morral
Published: 7/24/2012

Canadian report shows that brand recognition and support resources are the determining factors for entrepreneurs who choose franchise opportunities over traditional small business startups.

Ever wondered why so many entrepreneurs decide to buy into a franchise rather than pursue a traditional small business startup model? According to a new study by BMO Bank of Montreal, it's because franchises offer instant brand recognition and other benefits that aren't available to those who start a business from scratch.

Franchisees Like Strong Franching Brands

In a survey conducted for BMO by Leger Marketing, the reasons entrepreneurs cited for selecting a franchise model included:

  • Appeal of training/support resources (29%)
  • Access to a proven business model (24%)
  • Predictable startup costs (14%)
  • Ability to start a business with little/no experience (14%)

"Franchising is enjoying continued growth in North America," said Joseph Pisani, National Manager, Franchising, BMO Bank of Montreal. "For Canadians who are seeking to start their own business, a franchise may be the best route to increase their chances for success. As part of a major franchise network, an owner can expect to benefit from professional marketing, national advertising, specialized training and centralized purchasing."

Still, there are a number of issues entrepreneurs need to consider before buying a franchise. The entrepreneur's anticipated level of investment, leadership abilities and business goals will ultimately play a role in determining whether or not a franchise model is a good fit.

Would-be franchisors should also factor the total costs of franchise ownership into the franchise decision. In addition to the upfront franchise fee, new franchisees typically incur ongoing royalties, real estate debt, equipment and inventory expenses, and other costs.

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