Franchising is an excellent business opportunity for people who want to become a business owner but like the security that comes with working under a franchisor and using their proven systems. It’s common knowledge that franchises have a lower failure rate than startups, but opening a franchise business also has its own risks.
Continue reading to know the good and not-so-good things about starting a franchise.
Franchising Pros
An Effective System
When you purchase a franchise, you are tapping into years of experience spent by the potential franchisor creating its brand and systems. So, you won’t have to go through the process of finding what works and what does not because the franchisor has already done that for you.
Support and Training
The training and continual support offered by the franchisor are probably one of the biggest advantages of buying a franchise. You’ll always have someone to look up to if you have any questions or issues.
Brand Recognition
Creating a brand is a big deal. It can also require a lot of time and money. As a franchise owner, all the hard work has already been done for you. Before you open your doors, the customers will already know your brand name and what to expect from your business.
High Buying Power
As a franchise owner, you also get to benefit from the collective purchasing power of the franchise when it comes to buying inventory and equipment.
Networking
Aside from receiving support from your franchisor, purchasing a franchise will also give you access to a large network of other franchisees who are interested in your success.
Franchising Cons
Startup Costs
The costs of starting a franchise can be expensive, depending on the system. A lot of franchisees will require funding to be able to buy a franchise business.
Recurring Fees
Franchisors usually collect ongoing royalty and/or separate advertising fees from franchisees. Although you will reap the benefits of the franchisor’s support and marketing efforts, you will have to pay them a certain percentage of your profits.
Limited Autonomy
If you like to do things your own way, then franchising may not be the right business opportunity for you. When you buy a franchise, you will be required to operate the business as directed by the franchisor, with little freedom to make business decisions at the local level.
Contractual Agreement
When buying a franchise, you will be asked to sign a contractual agreement that will bind you for a given period of time, usually between 5-20 years. It may be difficult and costly to terminate a franchise agreement.
So Is Purchasing a Franchise a Good Idea for You?
Well, only you can answer that question since our abilities, talents, finances, and situations are different. Consider the points above extensively and determine whether franchising is right for you. You may also want to look at the common traits of successful franchise owners.
If you have decided that a franchise is a good fit for you, we have many franchise opportunities you may want to check out on our website.
