Thousands of new businesses start every year in the U.S. and many of those are franchises. With over 3,000 franchise brands, there are many options to choose from. Owning a franchise, like starting any other business, requires a business plan, an effective working team, and satisfactory financing.
Advantages of Owning a Franchise
The appealing advantages include:
-Owning a franchise is not like starting a business from scratch. A franchise owner doesn’t have to create a brand name, create viable products or services, develop an operating system, find suppliers, and test the concept to determine its viability. Those things are ready at the get-go.
-A franchise offers a defined identity and name recognition.
-A franchise offers a defined operating system and a training program with operating and ongoing support. An owner will get training on opening and daily operating practices, point of sale software, and more.
-Guidance and assistance are provided for marketing and advertising the business.
-A key aspect of owning a franchise is the purchasing power that a franchised brand offers.
-Very importantly, a franchise owner benefits from easier access to financing. Most franchisors offer some financing assistance. Plus, many financing sources will be more willing to lend money to the owner of a recognized franchise versus a “from scratch” business.
Disadvantages of Owning a Franchise
First, it is important to know that not all franchises are equally appealing nor are they equally successful. It is important to choose wisely. The disadvantages of owning a franchise include:
-Franchise owners need to know that they will have to abide by a franchisor’s rules, directives, systems, and contractual agreements.
-There can be high startup costs and there are ongoing royalty payments.
-Your operation will be linked with the success and reputation of the franchised brand.
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