Friday, February 21, 2014
In some ways, franchise owners have the best of both worlds. They have the freedom, authority, and sense of accomplishment that comes with owning their own businesses with a support system from other franchise owners from the same company and a starting point—they aren’t building it from scratch. There are a few good reasons to own a franchise, as well as some risks involved. If you’re considering buying a franchise, these points may help you tip the scale to see if it is right for you.
If you want to work for yourself and avoid the tough job market, buying a franchise can help you do that. However, you will have to deal with the corporate headquarters’ regulations and restriction. A really headstrong owner may want to incorporate unique ideas that are not part of the business model and will get rejected. People who are excited about hard work will enjoy owning a franchise. The less well-known the brand is in the area, the more work you will have to do to increase its popularity. You need to be willing to put time and energy into the business while following the franchisor’s system to the letter. If you are considering owning multiple small businesses or you want to be a business owner with a lower risk, buying a franchise is a good place to start. The business model is tried and true and the corporate leaders will offer training and support you won’t get with a business completely your own.
Now let’s look at the reasons buying a franchise may not be a good idea. First of all, it is expensive. If you don’t have wealth built up or stellar credit so you can get a business loan, buying a franchise is next to impossible. Even with a loan, you may find you need more money than you thought at the beginning. That could mean taking out another loan or borrowing against your home. Franchise costs can range from $15,000 to up to $2 million depending on the complexity and total size of the franchisor. Secondly, the risk is smaller, but still there. If your franchise doesn’t succeed and you need to close before the end of your contract, you can end up paying fees in the tens of thousands of dollars for breaking the contract.
After considering all these factors and more that apply to your individual situation, buying a franchise can be an adventure or a disaster. It’s important to do your research, make an informed decision, and decide when the time is right to buy a franchise.