Buying a franchise pros and cons

Buying a franchise can be a rapid process to set up your own business without starting from scratch. There are numerous significant advantages of buying a franchise because your business is based on a proven idea and you can use a recognised brand name and trademarks. You can check how successful other franchises are before committing yourself. The right franchise can give you a head start. Successful franchises have a much lower failure rate than completely new businesses. The franchisor gives you support – usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice.

There are also a number of drawbacks of buying franchise, such as:

• Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor.
• The franchise agreement generally includes restrictions on how you can run the business. You might not be able to make changes to suit your local market.
• The franchisor might go out of business.
• Other franchisees could give the brand a bad reputation, so the recruitment process needs to be thorough.
• You may find it difficult to sell your franchise – you can only sell it to someone approved by the franchisor.
• All profits (a percentage of sales) are generally shared with the franchisor.

Before buying a franchise, you must decide whether franchising is right for you and which type of franchise best to your strengths. You must assess the following points:

• You must be prepared to sell and you will need entrepreneurial flair. A franchise gives you a business blueprint – but it will not automatically give you customers.
• You will need to work hard, probably for long hours. Do you have the necessary dedication?
• Running your own business can be stressful. Think how you react to pressure.

• On the other hand, you may want to limit your risk. You might be more comfortable with a franchise than starting a new business from scratch.

As with any new business venture, you need to consider carefully whether you have the right skills and attitude to run a successful franchise. You need to consider how much you enjoy managing people, selling to the public or working alone – as these are common requirements of different types of franchise

There are some other vital advantages of buying franchise, such as:

• You benefit from any advertising or promotion by the owner of the franchise.
• You generally have exclusive rights in your territory.
• The franchisor will not sell any other franchises in the same territory.
• Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation.
• You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network.

Related documents: franchise agreement

Subscribe To Site:

Full Post Feed | Summary Feed | Comments Feed