A Franchise is an integral part of the economy and our lives. Ever enjoyed a bucket of the Colonel’s Original Recipe chicken? Dropped a package off at the UPS store? Had your haircut at Great Clips, stopped at 7/11, or worked with RE/Max when buying or selling a home?
All of these businesses offer franchise opportunities and they are just a few examples among more than 1,100 franchisors in the United States alone. Franchises are often appealing to potential business investors. If you are looking to invest in a business, there’s a strong chance you’ve looked into the possibility of buying a franchise, but do you really know the pros and cons in detail?
Before you buy, take the time to explore the ups and downs of franchising. You don’t want to jump on the first opportunity you see if it isn’t right, and you also don’t want to miss the right one. These simple tips will help you make your choice.
The Pros of Buying a Franchise
If you’re a ‘good news first’ type of person, you’re in luck, as we’re going to look at the upside first. Probably the biggest and most obvious item in the pro column for buying a franchise is brand recognition.
Setting up an all-new business comes with a ton of legwork. You have to get the brand name out there, spread awareness, and advertise heavily. With a reputable, well-known franchise, that work is done for you. Customers know the brand and your advertising costs are, in large part, taken care of.
Franchises also have established supply networks. Whereas finding reliable, trustworthy suppliers is often a challenge for a new business, franchises have suppliers in place and there will be plenty of resources available from your franchisor.
One of the biggest struggles for new businesses is keeping customers interested over time with fresh products and services. When you own a franchise, you can rest assured that new offerings will always be in development, so you don’t have to worry about trying to stay ahead of the curve.
These are just a few examples of the benefits of buying a franchise. The main thing to note here is that when you buy into a franchise, you’re buying into support. Many of the stressors of buying a business don’t apply to franchises because they have such strong support in place.
You should also note that many franchisors do provide help with loans as well. Should you need additional assistance or just want to explore your options, the team at Financing Your Way would be happy to help.
The Cons of Buying a Franchise
So, buying a franchise sounds great so far, right? Well, before you get too excited you should examine the potential difficulties involved. Unsurprisingly, many of them are directly tied to the benefits we explored above.
Franchises offer brand recognition, yes, but that’s only a good thing if the brand is well-liked. As the franchisor’s reputation goes, so goes your own when you own one of their franchises. Scandals, shifts in public opinion, health scares, and the influence of trends could all have a major impact on your business, through no fault of your own. A franchise is a solid anchor, but that same anchor could drag you down.
Next, there’s the cost. Supplier networks, marketing, and product development are all fantastic, but they come with a price. The initial cost of buying a franchise can be staggering and you should be prepared to spend heavily upfront in order to get in on such a good thing.
Oh, and those new products or services that the franchisor is promoting? If you don’t like them, that’s too bad. When you buy a franchise, your fortunes become tied to the franchisor, for better and for worse, and your ability to think outside the box and make your own plan becomes constrained, to say the least.
Weighing Your Options With Buying a Franchise
Franchises have similar aspects across many industries, but every opportunity is different. While making a comparison of the general pros and cons of buying one can be useful, the real test lies in the specifics of the franchise you’re interested in.
If you find an amazing opportunity, don’t let the potential downsides of owning a franchise put you off from achieving your vision. Likewise, if you find one that doesn’t seem to fit, with a brand you can’t quite get behind 100%, don’t let dollar signs lead you astray.
The truth is that you want any franchise you buy to be one that matches you as a person. And franchisees and franchisors alike are happiest when there is a perfect marriage of business goals, personality, and service approach between the owner and the brand.
So, when deciding whether to buy a franchise, remember these pros and cons, but also keep in mind that it will be your business, regardless of the name, which means you are the most important factor in making a decision. After all, you want your business to be something you can be proud of for years to come.