If you’ve ever wondered what it would be like to own a franchise, here are some of the reasons franchises can be great and some of the reasons franchises may not be a good fit for you.
- A good franchise is a business in a box. Open the box and out pops a ready-made business. You don’t have to do all the work of creating a business from scratch.
- The best franchisors have lots of training for you. Even if you’ve never been in that particular industry before, you will receive all the training you need, as well as your key employees, to be ready for your customers.
- Support by the franchisor will likely be provided in many ways. You will have a business consultant to call with questions about operations. You may also have a marketing consultant who will advise you about promotions and advertising.
- Finding the right location is critical and the franchisor will probably have a leasing consultant to help you choose the best area of town, consider all the demographics and traffic patterns and find the best fit for you.
- If the franchise is known to many people and those people have a high opinion of it, then you get to ride the name’s coat-tails to success.
- Since franchises have to conform because the “brand” must be standardized for customers to understand what they are getting, there may be very little room for creativity. Your product line will be out of your control, and you will have to participate in their promotions
- You will have inspections and be graded on your compliance to company standards. This may not be a problem, but then again, if your consultant is a tough nut, you may be very unhappy with your grade.
- The franchise may change and you will be expected to follow along. You may have bought your franchise with the knowledge that they have the best corned beef sandwich in the country only to find that they’ve decided to follow the healthy food trend and switched to low fat, low carb fare that leaves everything tasteless.
- Your territory may not be big enough to avoid competing with other franchises in the same chain. If you only get a mile radius of protection, can you make enough profit?
- Your livelihood depends on the stability of the franchisor. Do they have a stable track record? Have they been in the franchising business long enough to work out the kinks? Is their distribution system smooth and easy to work with? Do you get a quick response when you need help?
Although this is just a short list of things to consider when looking at a franchise, a franchise can be a quick and easy way to be in business, especially if you lack confidence to go it on your own. Remember, usually contracts are in force for ten years and the cost and financing will tie you in for that time period. Don’t forget that whatever you decide, you must be interested in the particular business, know you will enjoy it into the future, and be able to see a return on your investment.