Separate But Together: The Top Pros and Cons of Becoming a Franchisee

by

Starting From the Top

Having a hand on the wheel of business operations don’t have to be the result of starting from the bottom up. People can inherit or purchase commercial enterprises altogether. And, there’s always the option of buying into a franchise within a specific area. Inheritance, which kind of sounds like a long shot for many people, only takes a yes or no from the benefactor for the most part. Although they do exist, turn-key companies are somewhat few and far between in reality; if it were that easy, everyone would do it. In an “Art of War” kind of way, starting a business from scratch offers a lot of satisfaction and really builds a legacy to leave behind. But, sometimes breaking into a field means making nice with players already in action. It’s at those times when franchising offers opportunities to entrepreneurs that they might not have access to otherwise. The opportunity offered by franchising also comes with a few responsibilities that need to be considered prior to make an honest go of it. While looking into this franchise or that one, it behoves investors to thoroughly do their homework.

Doing Things the Right Way

Although franchise opportunities do not automatically guarantee gainful returns for investment, many popular brands have proven records of success. Buying in with the right corporate model means being able to forgo time-consuming and expensive trials and errors. Restructuring in marketing, research, and other business duties can have really high costs for new enterprises. When opening a franchise, much of the heavy lifting is done for the investors, which results in a polished product and logo to represent. Depending on the popularity and reach of a corporate network, brand name recognition should bring customers to the front door. This kind of association between customers and a corporate logo comes from standards and practices. When investors go with opening a franchise location, corporate headquarters often have systems in place to assist with training. This training explains protocols and teaches operations throughout the corporate network. It helps to ensure that a location has the same look and feel to it like others in a chain.

The Advantages of Operation

Besides having a structure in place to help investors with initial hassles associated with just opening the doors, corporations help with marketing and advertisement. Instead of having investors draft and advertise campaigns individually, corporate offices handle the operations for marketing. This includes local radio and television promotions as well as national collaborations. This marketing assistance even extends to the internet where the potential to reach customers is practically unlimited. The national reach of many corporate franchise networks means more access to powerful marketing systems in play. It also translates to having access to price points on supplies and equipment that can add up to big profits.

The Challenges Involved

Although franchising offers lots of rewards and advantages over trying to start something from nothing, it’s not always a wrinkle-free process. As a matter of fact, financing is one of the biggest challenges that come with opening a new franchise location. Depending on the enterprise in question, the costs involved with simply opening the doors of a franchise location can range from several to hundreds of thousands of dollars. These costs do not even include things like operations, insurance, regulation fees involved with doing business. In fact, to say that investment in a franchise often requires more money than going it alone is something of an understatement. As a silver lining, signing up for a location under a corporate name may attract extra attention when it comes to getting a loan. Sometimes those circumstances help, but it’s not a sure thing.

Staying Within the Lines

Besides the costs, and extra costs, of buying in and opening a corporate franchise location, there are other factors that make it more of a challenge than it looks. Often times, opening a location requires adherence to a list of rules and regulations set down by executive decision that leaves little to no wiggle room. If investors don’t like how things are meant to be run, they may have little to no influence about making changes. It’s either the right way or the highway in many cases. This can include everything from hiring practices to signs on the front door. Along with the rules and jurisdiction of corporate edicts, investors also have to worry about the way of network reputation as it pertains to an individual location. In other words, a scandal or simple misunderstanding occurring on the other side of the country can tank sales all over. No matter how well one location runs itself, the cover the image of the corporate brand and logo basically determines how well things are going to end. One major drawback of going into business the franchise way comes from all of the contractual obligations attached to maintaining or exiting a venture. Depending on the terms of an agreement, it may be nearly impossible to run a location the way an investor may want. If things get too bad, leaving the organization can be quite a hassle. In some cases, it may cost more to close the doors than it does to open them.

A Totally Achievable Task

With enough research and insight, opening a franchise location affords investors unimagined financial perks and rewards. Along with these benefits, there are a number of obligations that need to be fully understood and met without fail. It’s something of an all-or-nothing scenario when investors decide to represent an organization with a good deal of pull within a market. Certainly, there’s a significant amount of security and a sense of pride that comes from becoming a part of something bigger than yourself. But, it’s the vastness of the franchise chain that can make being a part of it so difficult. A corporation can operate with one set of systems and protocols in place at one time and change them down the line as they please. When this happens, some links in the chain can feel as if their only choices are to pony up the dough to stay current or get left behind. On the other hand, following the leader has been an accepted method for getting the best results in business for years. Ultimately, the best advice to take is to leave nothing to chance while breaking into the franchise business.

by