If you’re looking to start a business but would prefer to work with one that’s already established, a franchise could be a great option. But is it really the right option for you?
Reasons to buy a franchise
You don’t want to take on too much risk
The best thing about buying a franchise is that you’re investing in a brand that already has a customer base. You don’t have to worry about whether your new restaurant will be popular with the public or whether you can hold your own against bigger, well known brands.
Companies with franchises often have dedicated staff to support franchisees. So you won’t be completely alone if you set one up, as opposed to opening a regular business where there’s no back up. If you ever run into trouble you can call on experienced people to help you.
Any good franchise company will have tools in place to prepare you to run your business successfully. So you’ll get all the help you need. If you go it alone in business, any training will have to be provided by yourself at your own expense.
Most franchise companies will have marketing support for franchisees, partly because all marketing has to be consistent with company branding.
This means that you’ll be using proven strategies for attracting and maintaining customers. So this takes a lot of the heat off you as you won’t need to invest much time and money in market research.
Reasons why it might not be for you
The main downside is that buying into an established business is expensive. You’re paying for the security and for the right to use a big brand.
However, the upside is that because franchises are considered low risk, you might therefore be accepted for finance if you need to apply for it.
It’s not risk free
While the risk might be lower, that doesn’t mean it’s non-existent. Don’t run the risk of being too relaxed and expecting customers to flock in. You still need to run it like a normal business which is no easy feat.
As you’re using someone else’s brand, you’re a bit more limited in what you can do with your franchise. You’ll be expected to follow the rules and be prepared for seasonal offers that the company wants to promote.
If you want more control over your business, with more room to be a bit experimental, a franchise may not be right for you.
Are you thinking of opening a franchise? What are your reasons for choosing it?
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.