What Are The Main Advantages And Disadvantages Of Buying A Franchise?

franchisesIt is very interesting to notice that the number of people that now look for franchise opportunities is growing. This is great since it allows individuals the possibility to easily get into business while having support of specialists. Starting work as an entrepreneur without having to do it from scratch is a huge advantage. This is why most people actually want to try owning a franchise.

The really good options like will give the franchisees a level of independence that is to be appreciated in the sense that the business is almost always operated by the person that purchases the franchise.

In case you are not aware of this, the franchise will offer an established service or product that is already known and has brand recognition. You thus gain an automatic customer base that usually takes some years to properly establish. That basically increases business success chances as you are associated with methods and products that are proven to bring in profit.

The problem is that people usually stay focused only on the advantages offered by a franchise and forget about the disadvantages that, obviously, exist, as with every business opportunity. At the same time, many do not know much about franchise opportunities. For instance, most people that we talked to in the past had no idea that a franchise offers pre-opening support like:

  • Physical site selection
  • Financing
  • Grand opening strategy
  • Construction
  • Design
  • Training

The franchises basically offer ongoing support. They want you to make money since they also make money. Because of this, we also have ongoing support like:

  • Regional advertising
  • National advertising
  • Training
  • Operational assistance
  • Operating procedures assistant
  • Management support
  • Spending power increase
  • Bulk purchasing access
Also Read:  Buying Your Own Papa John's Franchise

Franchise Ownership Disadvantages

What we mentioned above are advantages but we should also discuss the disadvantages. We are talking about the fact that the business is not independent in a complete sense of the word. The franchise has to operate a business in a way that abides to restrictions and procedures set by w franchisor.

Restrictions usually include services and products that the business can offer, geographic territory and pricing. These restrictions are usually the really serious disadvantage.

You will need to pay a pretty large franchise fee and after that, ongoing royalties and even advertising fees have to be paid.

It is sometimes difficult to manage the operation, especially when balancing support and restrictions that come from franchisors with business management ability. At the same time, if the other franchisees do not perform properly, an image problem can appear and franchisors can end up faced with problems that are not seen in advance. There is always a limited franchise agreement duration and when referring to terminations, the franchisee does not have much input.

Conclusions

It is important that you consider both the advantages and disadvantages. This is basically the only way to be sure you will make a good decision. For most people, owning a franchise is the perfect way to start a business. However, for others, it is not something that is going to work.

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