If you are wondering what are the pros and cons of buying a franchise, I assure you that is not the only one who has asked this question. Buying a business, especially a franchise requires asking many questions and maybe not find answers for them. We are here to help you. See also Benefits of Franchising vs. Small Business
Advantages to Owning a Franchise
As an alternative to starting a business, many professionals look into purchasing a franchise. Like any type of investment there are both advantages and disadvantages that should be considered before signing your name and writing a check. A major advantage that comes along with owning a franchise is the established brand identity and reputation of the company’s products and services. Instead of trying to create a new brand, you can take advantage of a quality brand that already exists. Read here Am I A Good Franchise Candidate?
A franchise will also provide you with help picking a location, negotiating leases and vendor contracts as well as development of your space and team. Most franchises provide owner training and have available resources for any questions or concerns during any part of the ownership process. The third advantage of purchasing a franchise is that the company already has working, efficient procedures in place for things like accounting, hiring and scheduling. This is just one more aspect of the business you don’t have to create and improve yourself, it’s already there for you, ready to go.
The biggest advantage that franchises offer is a high success rate. Due to financial stability and a developed company, there is less chance that a franchise will fail in comparison to an independent small business. In fact, many franchises have financial check and balance systems to spot potential problems so they can be addressed and overcome. In a traditional business, these problems may not be seen until it’s too late for repair, causing the business to close its door for good. Now, of course there are disadvantages to owning a franchise too that should be discussed.
Disadvantages to Owning a Franchise
Franchisees are required to run the business according to a franchise agreement. This could restrict their territory, products and service offerings along with the changes that they are able to make. This could hinder the owner’s ability to manage all aspects of the business and develop it the way he or she would like. From a financial standpoint, owning a franchise means you will always have payment fees to the franchisor. Like leasing a car versus owning, you have ongoing payments but at then end of the agreement won’t necessarily have a car that belongs to you, or a business that solely belongs to you. Recommended Read Questions To Ask Before You Buy A Franchise
Another disadvantage is that at the end of the franchise agreement, the franchisor doesn’t have to renew the contract. If this happens, the business and its customers will belong to the franchise and not the franchisee. If you choose to sell the franchise at some point, you will owe the company a fee for selling meaning you won’t get all of the profit from the sale of a business that you developed and managed.
Overview. Franchise Business Pros and Cons.
Thinking about the advantages and disadvantages that come along with buying a franchise can help tilt you one way or another if you’re on the fence about investing.
Concerned with the documents that must be handled during the acquisition of a franchise. You must read Importance of Quality Franchise Agreement
Every potential franchisee is unique and will view these points in different ways. While someone focuses on the disadvantages, others will see the advantages and the opportunity in front of them if they become a franchisee. On top of reading this article, further research into the company you’re considering and their franchise agreements is crucial to making the right decision.