Franchise Advantages and Benefits

A franchise provides the powerful advantage of not starting a business from scratch.

Ihop staff and building

When you invest in a franchise, you leverage the power of:

  1. An established brand and its reputation
  2. Inside knowledge
  3. Unparalleled Resources
  4. Training and Support
  5. Reduced Risk

Ready to Move Forward?

At IHOP, we would love to hear from you! Get in touch with us for international and US opportunities.

The Advantages of Franchising

Over the course of time, franchising has become an increasingly popular way for entrepreneurs to start their businesses. As a franchisee, you pay a franchisor for the right to use their business model, trademarks, and support in exchange for a percentage of their profits.

If you're looking for a business opportunity that offers a proven business model, a loyal customer base, and the chance to be your own boss, then franchising may be the right option. While there are some disadvantages, several attractive advantages make it an enticing option for those looking to start their own business.

While there are some disadvantages, several attractive advantages make it an enticing option for those looking to start their own business.

1. Connected to an Established Brand and Reputation

One of the most significant advantages of franchising is inheriting the established customer base that it comes with. A franchisor will likely have a well-established brand name, attracting customers and driving sales. Customers are more likely to choose a recognizable brand over an unknown one because they know what to expect and they're trusted.

As a franchisee, you also benefit from a franchisor's already established marketing and advertising efforts which help promote your business and attract more customers than you would on your own. Overall, having access to an established customer base helps franchisees attract customers and achieve success more quickly.

2. Inside Knowledge of a Proven Business Model

Another notable advantage of franchising is the ability to implement a proven business model. Franchisors have typically already developed a successful business model over time, and franchisees can benefit from the franchisor's expertise and experience. Applying this business model is especially helpful for those starting in the industry as it dramatically reduces hurdles.

As a franchisee, you will receive detailed instructions on how to operate the business. This can include guidance on site selection, employee management, customer service, and more. Having this established foundation can save you time and money and help you to avoid any teething issues that come with starting a new business.

By implementing the franchisor's successful business model, franchisees achieve results quickly as they can focus on operating the business efficiently and effectively.

3. Access to Unparalleled Resources

When you partner with a franchisor, you gain access to invaluable resources. Franchisors will normally have a wide range of resources, including advertising campaigns, marketing materials, operational manuals, software/technology, and an established supply chain.

Franchisees can also benefit from the purchasing power of a franchisor. This power can help you obtain supplies and equipment at a lower cost, making your business more profitable. The beauty of franchising is that you benefit from the franchisor's previous decisions.

4. Continuous Training and Support

As a franchisee, you should have access to ongoing support and training that the franchisor provides. Franchisors are passionate about their business and consistently work with you to ensure you receive the training and support you need to succeed. The initial training will likely include information about customer service, marketing, legal responsibilities, and everything you need to get up and running comfortably from day one.

But this training and support continues after they've helped you learn how to run your day-to-day business. Franchisors have a vested interest in ensuring you are successful long-term and will support you with ongoing training around the latest trends and best practices.

Continuous Training and Support can be a compelling advantage to franchisees. It can save you time and money and help you avoid common mistakes. When you're considering a franchisor to work with, ensure that you explore their ongoing support and training offerings.

5. Reduced Risk

When you consider buying a franchise, you have the safety of not having to start a business from scratch; instead, you inherit the experience and expertise of a successful franchise. Not only has a franchisor formed a business model that works, but they're likely to have completed market research and development, so you don't have to. This means you can confidently start your business and follow the path to success.

With franchising, you also inherently become part of a network. You gain access to other franchisees for support, advice, and guidance, but you also have access to a network of supplier and distributor relationships that the franchisor has already developed. This helps you get the best possible prices for your products and services.

Franchise Checklist for Success

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Extensively research the franchisor's reputation and history

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Evaluate the actual cost of the franchise and include the potential ongoing fees and royalties

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Inspect and analyze the business model and potential growth opportunities

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Review the franchisor's support and training programs (initial and ongoing)

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Thoroughly review the Franchising Agreement

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Speak with current franchisees and get a sense of their experiences

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Visit various existing locations

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Consult with legal and financial advisors

Learn more about international opportunities

Potential Disadvantages of Franchising

1. Franchising Cost

The high cost involved in the process is something to consider if you purchase a franchise. Many franchisors charge a significant upfront fee to secure the right to use their established brand name, products, and services. Additionally, franchisees can be required to pay ongoing royalties and other expenses to the franchisor.

Understandably, these costs can become a burden for small business owners. While these costs can add up quickly, it's essential to consider inclusions in the franchising agreement to build the business successfully.

2. Limited Autonomy

With the prospect of franchising, you must follow the franchisor's established business model and operate within their guidelines and standards, making autonomy difficult. This practice can limit your ability to make decisions independently and may make it difficult to adapt to changes in the market. 

Franchisees will also have limits on what they can implement creatively. Franchises already have a predetermined brand, and there are strict parameters around what you can alter or add.

3. Franchisor Restrictions

Another potential disadvantage of franchising is the restrictions placed on franchisees. An example of a restriction franchisors can implement is the requirement for franchisees to purchase equipment and supplies from the franchisor directly. This can substantially limit your ability to negotiate prices and obtain the best value for money.

Additionally, franchisors often place restrictions around geographical locations. This means that if a franchisee is looking to expand their footprint, they will be limited to picking an area the franchisor has considered. These restriction controls can be problematic for business owners who want to implement their strategies. It's vital for potential franchisees to seriously contemplate whether they're willing to adhere to their franchising agreement.

Making a Choice: Is Franchising Right for You?

Once you've considered all of the advantages and disadvantages, spoken to advisors, and done your research, it's time to decide about franchising. While opening any new business can be daunting, it's ultimately a personal decision. If you're looking for a company with a proven track record, then a franchise may be an excellent option for you.

Things to Consider Before Buying a Franchise

Your Personal Goals and Interests: Consider your personal goals and interests before buying a franchise. Are you passionate about the industry? Do you bring relevant experience? Will you enjoy running this type of business? It's imperative to choose a franchise that aligns with your goals and interests.

Commercial Terms (including Franchise Fees and Royalties): Franchises are structured with Franchise fees and ongoing royalties, which can be significant expenses for franchisees, so reviewing the franchise agreement to understand these costs carefully is essential. Make sure you know what you're paying for and what you're getting in return.

Training and Support: Before buying a franchise, it's paramount to understand the level of training and support provided and whether it will be sufficient for your needs.

Franchisor Requirements: Ensure you understand these strict requirements and are willing and able to meet them before buying a franchise.

Territory Restrictions: Be sure to understand the territory restrictions before buying a franchise, as this can significantly impact your ability to grow your business.

Existing Franchisees: Ask existing franchisees about their experiences with training and support, profitability, and any challenges they've faced. This interaction will help you make a more informed decision about whether a particular franchise is right for you.

Legal and Financial Considerations: Before buying a franchise, it's crucial to consult with an attorney and accountant to review the franchise agreement, financial projections, and other legal and financial documents. Doing so can help you avoid any surprises or unexpected expenses in the future.

Consider IHOP As Your Franchise!

Join the IHOP family as a franchisee now!

IHOP is an iconic American restaurant chain with over 1,600 locations worldwide. We offer franchising opportunities to qualified individuals interested in operating and owning their own IHOP restaurant.

As one of the most well-known brands today, specific requirements need to be met, but if you are eligible, you'll be well on your way to opening a restaurant focused on providing warm, delicious food, friendly service, and great value!

Are you interested in learning more? Please submit your information here, and our dedicated team will contact you to discuss your application.

FAQs About the Advantages of a Franchise

How much does it cost to own a franchise?

The cost of owning a franchise can vary depending on the industry, the franchisor, and the location. Fees can range from a few thousand dollars to hundreds of thousands of dollars. You also need to consider ongoing royalties typically outlined in the franchising agreement. Other costs that need to be accounted for are equipment, inventory, and any other startup expenses.

Does owning a franchise mean you own a business?

Yes! Owning a franchise means that you own a business. However, it's necessary to understand that you are not the business's sole owner. Instead, you are part of a more extensive system and must adhere to the franchisor's rules and restrictions outlined in the Franchising Agreement.

Can I choose my own suppliers and vendors as a franchisee? 

In many cases, franchisees must purchase supplies and inventory from approved vendors or suppliers. This is done purposefully to ensure consistency across franchise locations. It's common, however, for franchisors to allow some flexibility concerning sourcing local products as long as they meet specific standards.

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Do You Want to Know More About Franchising With IHOP?

With all that information considered, we hope you’re interested in franchising with IHOP. We have a dedicated Franchise Development Department that can assist with questions you may have concerning a franchise agreement with IHOP.