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It’s not easy being a business owner, and that includes being a franchise owner. If you’re considering buying a franchise but aren’t sure whether it’s right for you, look at the upsides and downsides to franchise ownership before you invest your hard earned money. Here are some of the pros and cons of franchise ownership to keep in mind.
Pro: You Avoid Much of the Headaches Associated With Trial and Error
Regardless of whether you own a franchise or start from the ground level, when you own your own business, it’s inevitable that you’ll go through numerous trial and errors when building your systems. The benefit to owning a franchise is many of these errors are done ahead of time and you don’t have to bear the burden of figuring them out on your own. You’re buying into a system that’s established and proven to work, which means you get to enjoy the perks of business ownership without all of the hardship that goes along with it, especially in the beginning.
Pro: Logistics and Processes Are Already In Place
Traditionally, business owners have to forge their own pathways when setting up logistics and processes. This work can be treacherous in the beginning and may cause you to waste valuable capital.
Most franchisors have established relationships with vendors and have worked out the kinks to logistically get you everything you need to run your business. In many cases, the franchisor will have established a rate with preferred vendors, so you can even get a discount on certain supplies. You’ll start your path to business ownership with a tailwind from a healthy network of proven logistical partners.
Pro: Financing Your Business Becomes Easier
When a bank grants a small business loan, they do so because the risk of it failing is minimal. Banks want to get their money back, so they’re more likely to loan you the money to start when you have a solid, proven business plan in place, like what you’ll get when you buy a franchise.
Pro: You Start Seeing Money Faster
Equally attractive for both banks and you as the owner is the speed at which you start generating revenue. Since the groundwork has been laid for you, establishing your roots is a faster process than it would be with a traditional business. That means you’re able to get your franchise off the ground and generating revenue faster than if you started from scratch.
Con: It Costs Money to Own a Franchise
There is a monetary cost to all of these benefits. The initial investment fee, as well as ongoing fees in the form of royalties or flat rates, are required to tap into a franchise. Although these can eat away at your income, they often pay themselves back in dividends because you’re able to earn more than if you were to start a traditional business.
Con: You Lose Some Flexibility
As a franchise owner, you might come up with ideas for how to change up the advertising or process. Or, you might want to switch vendors. With a franchise model, these changes might not be allowed. Although you lose this flexibility, it’s important to remember why the franchise has restrictions in place. They’ve already gone through the trial and error process and have seen what doesn’t work. They might listen to your ideas but if they’ve seen past indicators that it won’t result in profits for the business, they will not allow you to implement the changes you might like.
Make sure you review the contract carefully before you sign, so you know exactly what you’re getting into when you buy a franchise. Although there are many benefits to franchise ownership, there are also some downsides that might not appeal to you. Consider the full picture before buying.
Susan Guillory is the President of Egg Marketing & Communications, a marketing firm specializing in content writing and social media management. She’s written three business books, including How to Get More Customers With Press Releases, and frequently blogs about small business and marketing on sites including Forbes, AllBusiness, The Marketing Eggspert Blog, and Tweak Your Biz. Follow her on Twitter @eggmarketing.