Owning their own business is part of the American dream for many individuals. Although investing in a franchise requires you to work hard for success, you may find it more tempting than starting your own company.
On The Upside, Franchises Offer Many Benefits
One of the biggest attractions of owning a franchise is joining a successful business. There’s a proven market for the product or service. The name recognition means you have a customer base right away.
The franchisor may have a training program that can help you get your employees ready to work right away. National or local advertising is already in place. Your franchisor may provide you with a marketing plan.
You may receive equipment, inventory, or supplies at a reduced cost from the franchisor. At the least, you’ll have access to reputable vendors.
Owning a franchise can make obtaining needed financing easier. For example, the Small Business Administration earmarks some of its funding for franchises.
On The Downside, Franchises Can Be Costly
None of this comes without cost. You won’t have the freedom to operate the business as you see fit. You must follow the rules and guidelines established by the franchise agreement. There’s little, if any, room for creativity or flexibility.
You may also find the monetary cost of owning a franchise to be never-ending. For starters, you’ll have to pay for the franchise. That can run into the thousands of dollars.
You will also have to pay the franchisor a royalty for every sale you make. You often have to pay for those training and marketing programs you need to get started.
You’re always part of the franchise. If the national brand or another franchisee is involved in a scandal or receives negative publicity, your business could suffer.
Do Your Due Diligence
Consider all the ups and downs carefully before deciding to purchase a franchise. Franchise agreements usually require a long-term commitment. They can be challenging to break if you change your mind, so investigate thoroughly before investing in a franchise.