Owning a Franchise Can Be a Shortcut to Success Show
Franchises are widely popular in North America with as many as 4,000 available brands located throughout the United States. As of 2018, there were approximately 758,000 franchise establishments employing nearly 7.88 million people. When it comes to starting a business, many people choose owning a franchise based on the belief that success is guaranteed. Unfortunately, this is not always true. It is, therefore, important to understand the pros and cons of owning a franchise to ensure you are making the best decision for your situation. What Is a Franchise?A franchise provides an opportunity to buy into an existing, successful business model that has a proven track record, a successful training program, a solid supply chain, and expert technical support. Some of the best-known franchises have impressive success rates, with low chances of failure. If you're considering buying into a franchise, knowing the advantages as well as disadvantages can help you best decide if this is the right venture for you. Advantages of Owning a FranchiseOwning a franchise has several advantages such as:
Disadvantages of Owning a FranchiseThe disadvantages to owning a franchise must also be considered and include:
The Franchise ApplicationIf you found a franchise that you would like to purchase, you must first contact the franchisor. Upon expressing an interest, the franchisor will likely ask you to complete a questionnaire or application form. When filling out the application, be prepared to provide detailed answers to questions about your finances, such as your personal assets, as well as your spouse's financial situation. The franchisor wants to make sure you are financially prepared to make the commitment and have the necessary backing in case the business runs into financial difficulty. Other questions may relate to your experience, background and goals, which can indicate your competence in running the business successfully and in accordance with the franchise model. It's especially important to franchisors that the franchise model be maintained, as a franchise's success depends on the uniform application of the system they have developed. The InterviewOnce you pass the questionnaire or application test, the next step is meeting with the franchisor. The franchisor will continue to explore your interest, commitment, and suitability; while your goal is to find out as much as possible about the franchise. The Franchise AgreementIf the franchisor decides you are a suitable franchisee, you will be offered a franchise contract that lays out the obligations of both parties. You should seek legal advice about the contract and review it carefully. Like any other contract, some aspects of it may be open to negotiation. Also, like any other contract, if there are any promises made about the franchisor/franchisee relationship that are not in the franchise contract, request that they be included. ConclusionBuying a franchise is like buying any business in that you have to do your due diligence and investigate the franchise fully. However, if you are well-suited for a franchise operation and select the right franchise, being a franchisee can indeed be the fast track to success. Is it better to own your own business or a franchise?Bottom line, franchises have a higher overall success rate than startups. Franchises operate under a predetermined business model that has already brought success while independent businesses make adjustments and decisions to their business model as they go.
What are the disadvantages of buying a franchise?The main disadvantage of buying a franchise is that you must conform to the rules and guidelines of the franchisor. Some franchisors exert a degree of control that you, as a supposedly independent business owner, may find excruciating.
What are the advantages and disadvantages of starting your own business?Advantages & Disadvantages of Owning Your Own Company. Advantage: Financial Rewards. ... . Advantage: Lifestyle Independence. ... . Advantage: Personal Satisfaction and Growth. ... . Disadvantage: Financial Risk. ... . Disadvantage: Stress and Health Issues. ... . Disadvantage: Time Commitment. ... . Try a Side Hustle.. What are 5 disadvantages of a franchise?There are 5 main disadvantages to buying a franchise:. 1 - Costs and Fees. ... . 2 – Lack of Independence. ... . 3 – Guilt by Association. ... . 4 – Limited Growth Potential. ... . 5 – Restrictive franchise agreements.. |