Many people are looking to change from the traditional employment arrangement toward business ownership through a dealer program or a franchise. Choosing a business model, in particular between a security franchise model and a dealership program, takes some careful evaluation and understanding.
In this post, we discuss the differences between a dealer program and franchise business to help you identify which may be better to meet your expectations for future success.
The Differences: Franchise vs. Dealer Program
To start, you’ll need to identify your specific business expectations and needs as well as your obligation to the specific type of business you are considering. Read on to understand the pros and cons of each business model.
Security Franchise
Many people misunderstand the model of franchising, as they think they will have less control of their business by entering an established franchise. This is not the case, however, as each franchise is unique and has different control levels in relation to the parent business.
To be a success, there needs to be a win-win situation in the franchise. Most franchises are powerful brands with a strong customer base within a region, country or even around the world. It provides an excellent opportunity for you to start running a successful business early and easily.
Certain communications, advertising and marketing plans are handled by the franchisor and this helps to get your business up and running. Reviewing and offering feedback on these programs can help you to form a relationship with the parent company. Additionally, good communication will build better profit margins and a loyal following. This helps build strong bonds, both in bad and good economic times.
Pros
- Franchises offer businesses options and ongoing training and support from the franchisor.
- As a security franchisee, you own each sold account, unlike in the dealership program where the accounts are owned by the parent company.
- Since the foundation of the business is already laid out, you will save on cost and time of marketing and advertising.
- Risks are minimal..
- It offers you training for how you can run and market your business.
- Since there are other security franchisees, you will have the benefit of a strong network of professionals; this is invaluable and will help in growing the business and franchise.
- The franchisor gives you the flexibility to express yourself and views that will be useful in growing the franchise.
- There is satisfaction and freedom of being your own boss as well as benefits of being part of a large organization.
Cons
- You will have to pay certain start-up fees and ongoing fees to the franchisor, which will contribute to larger campaigns; these fees will continue as long as you are in business with them.
Dealership program
Through this business model, you will enter into an agreement to sell a specific service or product from the company you choose to work with. This may be based on territory. There is training provided to lay down the basic foundation for the business and on fundamental operations of the business, including marketing, sales, field service policies, installation and funding.
Pros
- You have flexibility on your operations and you can carry other brands that are not produced by the company that you have the dealership agreement with.
- As a dealer, some of the programs will offer you the freedom to operate under their brand.
- Assistance and support services available.
- As an authorized dealer, you can easily download training and marketing materials from the dealership company. This can help you improve the convenience that you offer your customers.
Cons
- There is only financial incentive on the account that you have been offered to manage, but there is no guarantee for long term revenue. The parent company stays ahead at all times.
Setting Your Business Up for Success
The decision to go into business for yourself or to add complimentary products and services to your existing business is a major commitment. It’s one that smart business owners do not enter into lightly. With the information above, you can begin to evaluate the pros and cons of these two business models as you move closer to your decision.
In our view, the franchise model is the model that offers better returns for the franchisee and more opportunities for success. By setting goals that can be measured and improved by both parties, the franchise model strengthens partnerships between franchisee and parent company and has the potential to deliver results quickly.
To learn more about the franchise business model and get our roadmap for franchise success, check out our free e-book below, “Grow Your Business Using the Franchise Model.”
