Is Buying A Franchise A Smart Move For You?
The thought of owning a franchise can be very alluring. Whatever kind of industry you’re interested in probably has some franchising operations: restaurants, hotels, automotive, repair shops, salons and spas, etc. When done correctly, franchising can be very profitable.
However, it has its downsides as well. It’s important that you learn the pros and cons before deciding whether to buy a franchise or start a new business the traditional way.
Benefits of Buying a Franchise
You get plenty of support – Franchises offer support, training and tools to franchisees. You will have access to resources and operational assistance that you would not have access to if you were to start your own business from scratch. FTC.gov explains that the support may come in the form of a toll-free phone number, scheduled workshops, seminars, periodic newsletters, etc.
The business methods are already in place – A franchise already has a proven business method, otherwise it wouldn’t be a franchise. As an owner, you wouldn’t have to spend time and money trying to come up with your own method, just apply the one the business already has.
No need to develop products – Product planning, development and implementation can be a very time-consuming and costly endeavor. There is always the possibility that a new product will fail. A franchise already has its own products that have already been developed and proven to be successful.
Brand name recognition – Franchises have already spent years and millions (or even billions) to get to where they are now. You can be part of something that is nationally or globally recognized. Small companies cannot compete on this level.
Drawbacks of Franchising
Fees – The fees required to become involved in the franchising business can be very costly. The franchise itself can cost several thousands of dollars. Entrepreneur.com explains that in addition to the initial fees, there are also royalty fees, marketing fees, and in some cases, required purchases.
There are rules – There is not much flexibility in what you can do and cannot do. There are rules that must be followed. If the reason why you are interested in owning a franchise is because you want to be your own boss, take heed: there is still someone higher you need to answer to. You might not be allowed to do business with barter companies, either. While starting your own business may seem daunting or complicated, at least you will have more freedom.
You are held back – If you ever get a great business idea, you might not be able to use it since you are bound to the franchise agreement. In other words, owning a franchise can hinder innovation. It might be more difficult for you to achieve your ultimate dream.
Is a Franchise Right for You?
It may very well be a lucrative opportunity for you – especially if you have a passion for the industry and have enough money to buy it. However, you need to think of the long-term. Will it be profitable ten years from now? Twenty? What if you end up getting stuck with it?
If you consider yourself to be innovated and creative, it might be better to start your own business and slowly let it grow over time. There will be more opportunities for corporate bartering through companies like Sherwood Integrated Solutions as well.