Is Franchising A Business The Right Choice For You?

Running a business can seem like a daunting task. After all, there is so much to be done before you get anywhere near making your first dollar! The good news is that a franchise might make being a business owner and operator significantly easier, and more profitable. With this in mind, let’s take a good look at the pros and cons of running a franchise, below. 

Pros of running a franchise

You don’t have to be an expert to succeed

First of all, one of the most significant benefits to choosing a franchise model is that you do not have to be an expert or have years of experience in the field, or even in business to be a success. The reason for this is that franchisers will provide you with plenty of guidance, and support, and training to help you get up to speed before you open, and to ensure you stay on top of the latest trends and developments as your business progresses. 

Franchisers also offer franchisees an established business modern and brand, which means they do not have to start from zero. Instead, those choosing to invest in a franchise business get to stand on the shoulders of giants and learn from their mistakes. Something that can save them a great deal of heartache and money! 

It’s easier to get funding 

Risk is a big deal in business and those looking to invest will always want to find opportunities that minimize the risk they could lose their money. The good news is that because franchise businesses are associated with a great deal less risk than one’s that are started from scratch it can be much easier to find funding even from traditional sources like banks. After all, you will have all the resources, expertise, branding, and motivation of a large and successful company behind you, even as you first open your franchise. 

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Franchises offer a ready-made brand 

One of the most challenging things about running a business is to craft a brand that customers not only recognize but relate to positively. Indeed, companies sink millions of dollars into branding and marketing to attract customers. 

However, things work a little differently when it comes to a franchise. This is because the parent corporation has already built up a recognizable brand, and a base of customers to whom they know they can sell their product. Thereby making getting things up and running far easier than for a new business, built from scratch. 

Franchises even offer more recognition for those looking for work, than a new business would. Something that means it will be easier to employ people as well. 

Lower overheads 

In business, success is a simple equation. You need to have more money coming in than is going out. Of course, having low overhead costs can go a great way to making sure this happens, and the good news is that franchises can offer value here. 

First of all, when you run a franchise you can get much better rates on supplies like packaging, cleaning products, and other necessary items. This is because the parent corporation can buy them in vast bulk orders, and then distribute them to individual businesses. 

Additionally, when it comes to marketing materials, the same applies. Indeed, many parent corporations deal with a significant amount of marketing for the franchisor as part of their overall strategy. Something that can include national campaigns with TV and online ads, product placement, and reviews all of which can drive business to your store. 

Although it is also worth noting that there are some areas in which running a franchise may be more expensive than a traditional business. Check out the section on investment below for more details. 

Vested interest means more support for you 

Now, there is a reason that the parent cooperation of your franchise offers so much support and help to your business. It’s because they will charge you to invest, and many take a portion of your profits. This can be seen as a negative, as mentioned below, but it can also be an advantage. The reason is that if your franchisor has a vested interest in seeing you succeed, they will provide you with as much help as they can to do so, often in the form of training academies, design, marketing, financing. This in turn puts you in a far better position to be profitable! 

Cons of running a franchise 

Of course, just like any opportunity in business, there are some downsides to choosing a franchise that needs to be considered as well. Keep reading to find out what they are. 

Little opportunity to be creative 

One of the biggest downsides for some of those running a franchise is the lack of opportunities for creativity. This situation tends to arise because the brand, product, and business model are so well-honed, it leaves little wiggle room for any innovation or creative development. A great example of this would be the world-famous franchise McDonalds, where owners of each restaurant do not get the chance to come up with new dishes, change the packaging or even decorate their venues in their own style. 

However, for those that are naturally creative, or that are looking for instant recognition that a large brand provides, the creative issue does not pose that much of a problem. 

Extensive investment 

While the everyday running fees may be lower than for a traditional business, franchises can be costly in two particular areas. The first is the amount that franchisors charge franchisees to get on board. Indeed you can expect to pay more for a franchise that is more well known. 

However, if you are willing to go for an up-and-coming franchise you should be able to find something that fits your budget in most markets from opening a restaurant, to running a cleaning business. Although doing your homework and checking the financials involved is advised no matter what type of franchise you pick. 

Another area in which franchisees can be more expensive than other types of business is when it comes to royalties. These are the fees that the parent corporation takes off you for the pleasure of running a business in their name. They can be high too, at around 5% of your profits, which can significantly eat into your margin. 



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