Buying a Franchise: Is the Risk Worth It?
For those who want to become part of a franchise, there is one common question: Is entering a franchise worth it? The short answer: yes, if you and the franchisor do your parts. You will have a lot of business advantages when you decide to franchise. However, there is heavy financial risk, as with any new business.
Pros of Franchising
The odds are in your favor when you purchase a franchise. When entering a franchise, you get the tools and systems of the whole company. You get a network of other franchisees and their experience.
On top of all that, you get the franchisor’s experience. They have made the mistakes and successes concerning the recipes, locations, hiring, and expenses. They already know the costs, and they’ve taken a lot of the guesswork out of this part of the business. This reduces your risk of a failing company, especially if the brand is well-established. Likely, the franchisor will also have a built-in marketing plan, removing some of this responsibility from your plate.
Having so many other entrepreneurs within the same overall franchise gives you many shoulders to lean on until you get into a rhythm. In franchising, you may find the saying: “You’re in business for yourself, but not by yourself.” You get to have all the benefits of owning your own business without going it completely alone.
Cons of Franchising
Franchising, unfortunately, is a pricey venture. It can even cost you more than the startup to form your own separate business. Plus, you’ll have to pay royalties to the franchisor. And there are other fees, depending on your contract. While the franchisor has a great marketing plan and other tools, you may have to pay to receive this support.
You’ll also have to accept that you’ll have limited creativity. It’s extremely important to franchisors and to the health of the whole company that their branding stays on target. So you likely won’t be able to change anything about how the franchise operates or looks.
One other con related to the contract is how long you may have to stick with the business. If you end up in the wrong franchise for you, you could be stuck for years.
So is Franchising Really Worth It?
The answer to that question varies from franchise to franchise. And it depends entirely on your ability to research and accept the risks. Researching the franchise and asking the right questions can help you avoid costly mistakes. More than that, it will make your franchising experience worth every penny.