Exploring business ownership opportunities often leads to the question of whether or not you want to open a franchise. Being able to take advantage of a well-known name and proven track record can make owning a business easier, but there could also be a few downsides. Checking out these pros and cons of owning a franchise helps you determine if this option might be right for kicking off your goal of becoming a business owner.
What Are the Advantages of Owning a Franchise?
Franchises are established businesses that allow an independent party to buy into the current business plan and open a new location. You’ll find that there are several significant benefits that come with purchasing an already-existing business.
- Enjoy Easier Entry Into a New Industry: Are you curious about opening a restaurant or fitness center but lack any real experience in the industry? With franchises, training is often built into the contract. While you’ll definitely need some business skills, you can use your entrepreneurial mindset to quickly adjust to working within a new industry.
- Begin With an Existing Customer Base: Building brand awareness is one part of owning a business that you won’t have to worry about with a franchise. Most franchise opportunities already come with an established fan base, which means you won’t have trouble attracting customers.
- Lower Your Risk As a New Business Owner: Startups come and go as fast as people have ideas, and you might prefer to avoid failure on your first business venture. Companies that offer franchise opportunities have a long history of successfully operating their business, which gives you an extra boost of security.
- Receive Training From the Franchise Owner: Franchisees get the benefit of receiving information about the company’s current operations that eliminates many of the initial hardships that come from starting a business. From ordering supplies to planning employee schedules, you’ll have other models to follow that make adjusting to life as a business owner easier.
- Start With Possible Expansion Opportunities Already In Place: You may already have big dreams of owning more than one business. Once your franchise is up and running, you will usually have the option of opening additional locations.
What Are the Possible Downsides of Franchises?
Looking at this decision from every angle is important for helping you to launch yourself as a business owner. These potential downsides are worth exploring to see how they could impact your success.
- Understand That Contracts Have Time Frames: Franchisees sign contracts that typically have an end date. While you’ll usually have an idea if a company isn’t going to renew the contract, the lack of a guaranteed business might be off-putting. On the flip side, you may like knowing that you aren’t bound to a long-term contract if you change your mind about running your franchise.
- Make Sure You’re Comfortable With Less Control: If you’re the type to bristle at being told what to do, then a franchise might not be right for you. Depending upon the terms of your agreement, you might not have much choice over important decisions such as the operating hours or even the general layout of the store.
- Expect a Higher Initial Investment: Big businesses know what they are offering to their franchisees. You’ll likely need to plan for putting a larger initial investment into your new business compared to a startup, but you’ll also enjoy greater chances of seeing returns faster.
- Know That You’ll Have Less Creative Freedom: You can’t exactly redesign the logo of a recognizable brand, which might be frustrating if being able to exercise your creative nature is a perk of business ownership for you. But, you may also like knowing that everything is already designed and planned if you look forward to running your business right away.
- Be Prepared for Varying Levels of Support: Some franchisors offer vast amounts of training, mentoring, and resources. Others may pretty much let you figure things out on your own. Making sure that you understand what you get in return for your investment helps you avoid feeling left in the dark when you were expecting support.
Weighing all of your options is a sure sign that you have the right mindset for initiating your journey as a business owner. With these key concepts in mind, take some time to talk them over with a mentor along with other people in your life to decide if a franchise fits your business plans.