The Pros and Cons of Buying a Franchise
The decision to buy a franchise is a major, life-changing decision: it is not a choice to be taken lightly. Our aim certainly is not to scare away potential franchisees. However, a happy franchisee is a prepared franchisee, and one certainly must be one-hundred per cent clear on what, exactly, they are getting into. As such, we at BADA have compiled a list of the pros and cons of buying a franchise. Be prepared, be aware, and get ready to conquer the entrepreneurial world!
Pros:
--Owning a franchise gives you the freedom to work for yourself. You can set your own hours, choose to work from home or from an office space, and most importantly, escape your boss’ shadow.
--As a franchise owner, you are in control of your own destiny. As a potential entrepreneur, you likely see yourself as having an internal locus of control. This means that you - and only you - are responsible for your success.
--If you are interested in entrepreneurship, but unsure how to begin, franchising is right for you! With a franchise, you don’t have to start from scratch, as most of the work is already done for you. We provide the business, you provide the success.
--You are not confined by somebody else’s mission, vision, or work parameters. This business can go where ever and as far as you want it to go.
--Rather than setting out into the business world on your own, as a franchisee you will be offered support and advice from the franchisor. Your business is based on a proven idea and most franchises have high success rates than new start up businesses.
-- You become part of a bigger brand but also a bigger support team/network; starting up in business can be lonely and sometimes it’s nice to know how others in the same field are doing and what strategies they use.
-- A recognised brand name will benefit you when advertising, not just to customers but also to advertisers; some advertisers want guarantees that you are a reputable company before they will advertise you.
-- You usually have exclusive rights to a territory, which means the franchisor won't sell another franchises in your area; which means less competition.
-- Financially, banks are sometimes more likely to lend money to invest in a franchise, with a good reputation, than a sole trader.
-- Relationships with suppliers (and advertisers) have already been established, which can make life much easier!
Cons:
--Being a franchisee requires a large amount of self-reliance and responsibility. If you cannot trust yourself, small business ownership may not be right for you.
--All businesses face ups and downs: when you own the business, however, those highs and lows are felt much more personally.
--While being “your own boss” does provide inherent freedom, it also takes up a lot of time. If you cannot make a large time commitment to your business, entrepreneurship is likely not for you.
-- Costs may be higher than you expect. Most franchises charge an initial fee to buy the franchise, but then they often also get you to pay continuing management service fees or a percentage of your sales. Some you may even have to agree to buy products from the franchisor or particular suppliers.
-- Franchise agreement can often include restrictions on how you can run the business. This is something you need to discuss with your franchisor before signing the dotted line.
-- How the franchisor vets and interviews you is a good indication of how they have selected other franchisees. This is important to think about as other franchisees could give the brand a bad reputation and therefore impact on your business.
-- If you decide the franchise is not for you it may be difficult to sell your franchise as the franchisor will have to approve the sale to someone new.
Owning a franchise is a wonderful, life-altering experience. The successful franchisee will be rewarded with freedom, success, and the satisfaction of owning and running their own business. We hope this has made your decision a little easier!
We also recommend you do the below online test to see if you are right type of person for becoming a franchisee.
http://www.whichfranchise.com/diagnostic_tool3.cfm
Thank you for reading,
Diana Dryburgh
