Should You Buy a Franchise?


Even though buying a franchise can be less expensive than starting a business from the ground up, it still requires significant capital investment. In addition, running a franchise business requires a lot of hard work, and you must be prepared to operate your new business based on someone else’s rules. A franchise is a commercial and legal relationship between the franchisor (owner of a company) and the franchisee (an individual who is starting a franchise/branch of that company using the company’s business model and trademarks). Remember that the franchisee sells the goods and/or services that the franchisor provides.

Following, check out some of the pros and cons of buying a franchise so you can make a well-informed decision.

The Pros of Buying a Franchise

Regardless of the type of franchise — from fast food and hotels to automotive and hair salons — most franchises come with the following benefits:

Startup Stage Can Be Skippedraising funds for the business

Access to Training and Support

Midas Auto Repair

Brand Recognition

A franchise gives you access to an established, recognized and loyal consumer base along with a potential employee pool. It can also give you an expedited path to profitability by bringing in customers and prospective employees right from the start.

Marketing and Advertising Bonuses

In addition, you’ll receive valuable input and help from the franchisor on how to develop and execute effective marketing campaigns of your own. They may also provide a marketing plan that includes market research, strategies, sales forecasting and budgets.

Collective Purchasing Power

Easier Access to Financing

specifically for franchisesSBA Franchise Directory

Real Estate Resources

The Cons of Buying a Franchise

The franchise model isn’t without its challenges. Here are some of the most common ones:

High Startup Costs

Reputation Management ProblemsSubway’s pitchman Jared Fogle getting arrested in 2015death of the company co-founder Fred DeLucanumber of franchisees falling by 1,221

Limited Flexibility franchise owner

Some franchisors also tend to micromanage their franchisees to a great extent. Depending on the contract, they may have a say in such details as the business’ physical location, hours of operation, signage, layout, pricing and resale terms, among other things.

Contracts Can Be Tricky:

Buying a Franchise: A Consumer Guide

Escalon Services

As CEO, I bring a unique blend of hands-on operational experience and strong analytical and strategic capabilities. With my experience in Fortune 50 as well as an entrepreneur, I know first hand the frustration of getting bogged down by the never-ending demands of things that are non-core, yet essential to running a business. From Finance and Accounting, to HR, Payroll, Insurance and Tax.
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