Taking an initial step towards buying a franchise brings a lot of questions in your mind like what, which, when and where to start. Above all, you think about the advantages related to specific business as well as the disadvantages which an obvious part of any business. To reduce the number of questions in your mind related to the buying a franchise, here are described the advantages and disadvantages.
Advantages of Buying A Franchise
- Marketing Support: Almost the same tried and true marketing plans are applicable which eliminate the costly guesswork when you are planning for a franchise business. You will also have access to a national or regional advertising fund.
- Additional Sources Of Revenue: As a franchisor, you will obtain additional income as on-going royalties which are paid by your franchisees and it is determined by the franchise agreement. The royalties include the monthly amount of money that includes the percentage of franchisees gross sales.
- Cost-Effective Expansion: As the franchisees handle the research and funding for the shops in your chain, so you don’t need to worry about spending on your own or request for any additional funding from banks or investors to empower your business.
- Supervision Of Talented Manager: From beginning to finish, managers do everything like choosing the franchised location, unlike a salaried employee and will be responsible for dealing with any issue related to your franchise business.
- Scalability: As per your requirements and business goals, you can customize your franchise agreement to focus on your national or regional growth.
Disadvantages Of Franchising
- Investment: The franchise will need to invest time and money in business development, legal documents, a flagship store, recruiting franchisees, marketing and packaging plans.
- Costly Legal Action: In an unfortunate condition that franchisees refuse to cooperate or find an unprofitable deal, it may require a legal action which can be costly and damaging your reputation too.
- Less Control: The franchisees will have to agree to follow the training and instructions, but you can’t make changes without running into disagreements. Your franchisees are still, independent businesses and negotiations may be essential.
- Share Of Profits: All your hard works or profits that will be usually shared with the franchisor as a percentage of sales.
What To Do Now?
Understanding the pros and cons of becoming a franchisor is a great beginning point to decide what you need to do further. Remember, there is nothing in this world that does not come with its negative points. So, it is better to look for the advantages or consult with the professionals.
At Ismail Alptekin Business Developer, we help our clients providing consultation about franchising so that you can make a deal that turns out to be beneficial. For the past many years, we have been serving many clients, now it’s your turn. Call us to discuss your project.