What you need to know about buying a franchise.
If buying an existing business doesn’t sound right for you, but starting from scratch sounds intimidating, you could be suited for a franchise ownership. To determine if this is the right way to go, it helps to know the basics of this process and how to get started.
What is a franchise?
A franchise is a model that fills the gap between working for somebody else and working for yourself. A franchisee pays an initial fee and ongoing royalties to a franchisor. In return, the franchisee gains the use of a trademark, ongoing support from the franchisor, and the right to use the franchisor’s system of doing business and its products or services.
What are the main benefits?
- A well-known brand name is already established
- Reputable franchisors conduct market research before selling a new outlet, so all the hard work is already complete
- Safety and liability concerns are already addressed so there is a reduction of risk
- Supervision and consulting is readily available
- National and local advertising programs
- Operations manual provided
What are the things to be aware of?
Franchising, however, is not for everyone. Headstrong, independent entrepreneurial types may feel restricted if they launch themselves into a franchise opportunity. Common downsides of owning a franchise are:
- Loss of control
- A binding contract
Also, know that some franchise systems work better than others. A weak franchise program will not train you well to handle the challenges of the business, will not help when problems arise, and won’ t make the best use of advertising dollars. Because of this, it’s essential to research the opportunity and company thoroughly before signing on the dotted line.