Pros and Cons of Owning a Franchise

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When you are looking to own your own business, there are many choices.   One of these choices is whether to buy a franchise or an independent business.    There is no right or wrong answer here.    It depends on numerous factors -- you will have to evaluate all of these factors and determine for yourself what is the best fit for you.    This blog post will strive to present some basic pros and cons of franchise ownership.   This is certainly not an exhaustive list, but hopefully will provide a useful starting point as you explore and weigh your options.   Let's first start with the "Pros".

The Pros
  • When you buy a franchise, you become an independent business owner, but you do have the support of the franchise system behind you.   The systems and support offered by franchisors can be invaluable, not only to first-time business owners but even experienced operators who want to capitalize on the experience of others.   Franchises, regardless of the industry, shorten the learning curve and typically have identified what works and what does not work for a particular business.
  • If you chose the right franchise brand, one with a good track record of success, then your odds of being a successful business owner also increase.  The solid franchise will have many years of experience and proven market concepts and products.
  • Franchises can assist with many of the initial planning steps - selecting the appropriate location, site design, construction, and training.
  • Franchises typically offer on-going support and training in all operational areas -- operations, marketing, purchasing, etc.
  • Often franchises have recognized brands and products that consumers have come to know and trust.   A new franchise owner benefits from this by being able to step right into a market and have instant brand recognition.

The Cons

  • When you own a franchise, you must operate your franchise unit according to standard procedures and requirements that are outlined in your franchise agreement.   These requirements and specifications may specify the products you can offer, pricing, marketing efforts, layout and design of your interior space, signage, hours of operation, etc.    The degree of franchise control will vary between the different types of franchises and industry. Some folks prefer more flexibility about how they run their business -- in these cases, a franchise may not always be the best fit.
  • Franchisees will typically pay an initial franchise fee upfront and then pay on-going royalties and advertising fees.
  • Franchisees are often "tied to the hip" of the overall performance of the franchise system - so if the franchise system starts to falter or their reputation becomes damaged in some way, then franchisees may suffer negative consequences.
Again, there are no right or wrong choices here.   Owning a franchise may be the right call for some folks, while owning an independent business may be the right call for other folks.   It is worth evaluating the pros and cons, have a good understanding of your strengths and weaknesses as a business operator, and think through the decision carefully before deciding.

We wish you all the best.  We would invite you to provide your thoughts and comments on this post or if you have questions, please feel free to CONTACT US via our contact form.     Thank-you and we wish you all the best!


 
  • Author: Matt Maxwell
  • Date: May 10, 2012
  • Category: Buying a Franchise or Business
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