The Pros and Cons of Owning a Franchise

Investing in a franchise makes business sense to many people as it is seen as an easier alternative to starting from scratch. The allure of buying into a franchise is often because of the successful business synergy that franchisors offer their franchisees.

Pros and cons franchise image 4444When exploring whether to invest in a business, it is always helpful to list all the pros and cons of doing so to solidify your decision. We have compiled a checklist of all the positive and negative points to consider when buying a franchise.

The Pros

There are many pros to owning a franchise:

  • Brand awareness has already been established and consumer loyalty already exists
  • Better collective buying power
  • Marketing collateral is usually not an added expense
  • A trusted or proven business model and system
  • Self-employment – being your own boss
  • Lower risk of start-up failure
  • Franchise business loans are easier to apply for than personal or business bank loans
  • Seasoned franchise owners can easily be accessed for ideas, mentorship or advice
  • The initial investment cost can be made back over time

The Cons

There are pros and cons to most things in life, and owning a franchise is a double-edged sword. Explore the negatives or cons of owning a franchise:

  • Ongoing advertising or royalty fees to the franchisor
  • The franchisor has all the control and say in how the franchise is set-up and run
  • Almost impossible to break a contractual agreement with the franchisor
  • Set branding limits marketing creativity
  • If the franchise loses credibility or popularity, yours will too
  • Restrictions on operating vendors, products you may sell, and operating locations
  • Your financial information must be shared with the franchisor
  • Your contract may not be renewed by the franchisor at the end of the franchise term
  • Long hours

Research, Research and Research

To cultivate a successful franchise opportunity, experts will agree that your first port of call is to research. Research the franchise opportunities in your area, research the target market, and the financials of franchises you are considering.

Get out and speak to the owners or managers of franchises operating that seem to be doing well. Speaking to people is the best way to gauge the market and keep your ear to the ground. Valuable insights can be shared in this way. If you can, attend a networking event of franchise owners for better and current insights into operating a franchise.

Hiring a knowledgeable law firm, such as Larkin Hoffman Franchisor Attorney, is one of the best ways to navigate and establish the initial set-up of a franchise. Attorneys who are experienced in franchising can assist you with all the legal and contractual obligations that are needed to run a franchise.

Buying a franchise is not guaranteed to always be profitable, but with careful research, evaluation and scrutinization of existing business opportunities, it can provide a good indication of success. As said before, there will always be advantages and disadvantages to owning a company and a franchise is no different – the onus is on you to make it work at the end of the day.