Despite what is said about the advantages of a small business, no one can deny that size does matter and that the “law of size” is alive and well, especially in the world of franchising. Small businesses have trouble competing with franchised outlets that are large and have a strong brand behind them. Still, that’s only half, you also need to consider the economies of scale involved on the buying side.
These economies of scale provide a small percentage slice for the franchisor to be more profitable to reinvest in its brand and the services it provides to its franchisees, while hopefully still providing lower costs for franchisees in the system. A small independent business just can’t keep up with a franchised establishment, it has to work harder and smarter than its franchised competitors.
When considering a franchise business opportunity, you must remember one of the key advantages of a franchise business over any other small business for sale; and that advantage is economies of scale. In fact, economies of scale often allow a franchised business to compete head-to-head with a large corporation with multiple outlets, as they also have economies of scale. Still, the franchised establishment also usually has an owner / operator with the skin in the game.
If you had to bet on a business or a brand, whether at a local, regional or national level, you should bet on the franchised company, since they have all the advantages including one of the most important; scale economics. Because in the end size does matter, it matters a lot, so think about this.