Advantages & Disadvantages of Owning a Franchise
Advantages & Disadvantages of Owning a Franchise
FRANCHISE:
A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. The franchisor (the company owner) sells the rights to the franchisee and then typically receives a fee for ongoing support, therefore having a vested interest in the success of each franchise.
Franchising began back in the 1850's when Isaac Singer invented the sewing machine. In order to distribute his machines outside of his geographical area, and also provide training to customers on the use of the machines, Singer began selling licenses to entrepreneurs in different parts of the country. Today many such franchise opportunities are advertised via the Web and other media. Examples of franchises include Carvel, Tutoring Club and Liberty Tax Service.
Advantages:
- There is a higher likelihood of success since a proven business formula is in place. The products, services, and business operations have already been established.
- Bankers usually look at successful franchise chains as having a lower risk of repayment default and are more likely to loan money based on that premise.
- The corporate image and brand awareness is already recognized. Consumers are generally more comfortable purchasing items they are familiar with and working with companies they know and trust.
- Franchise companies usually provide extensive training and support to their franchisees in effort to help them succeed.
- Many times products and services are advertised at a local and national level by the main franchise companies. This practice helps boost sales for all franchisees, but individual franchisees don't absorb the cost.
Disadvantages:
- Franchises can be costly to implement. Also, many franchises charge ongoing royalties cutting into the profits of franchisees.
- Franchisors usually require franchisees to follow their operations manual to a tee in order to ensure consistency. This limits any creativity on the part of the franchisee.
- Franchisees must be very good at following directions in order to maintain the image and level of service already established. If the franchisee is not capable of running a quality business or does not have proper funding, this could curtail success.
Sometimes franchisors may be lax on their commitment to support the franchisee. Also, they may make poor decisions that would have an ill effect on the franchisee. Therefore, it is important to research any franchise concept thoroughly before signing any agreements.
It is suggested you contact a franchise consultant to discuss if franchising is right for you. You can visit FranchiseBuyersNetwork.com and click on the Franchise Consulting link to have a local franchise consultant contact you for a phone interview.
Advantages Disadvantages of Owning a Franchise - To learn more about this author, visit Don Daszkowski's Website.
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When considering life as an entrepreneur, it is important to understand the definitions of a franchise, business opportunity and a start-up business. There are, of course, advantages and disadvantages to each style of business. In this article we will discuss the advantages and disadvantages of owning a franchise.
FRANCHISE:
A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. The franchisor (the company owner) sells the rights to the franchisee and then typically receives a fee for ongoing support, therefore having a vested interest in the success of each franchise.
Franchising began back in the 1850's when Isaac Singer invented the sewing machine. In order to distribute his machines outside of his geographical area, and also provide training to customers on the use of the machines, Singer began selling licenses to entrepreneurs in different parts of the country. Today many such franchise opportunities are advertised via the Web and other media. Examples of franchises include Carvel, Tutoring Club and Liberty Tax Service.
Advantages:
- There is a higher likelihood of success since a proven business formula is in place. The products, services, and business operations have already been established.
- Bankers usually look at successful franchise chains as having a lower risk of repayment default and are more likely to loan money based on that premise.
- The corporate image and brand awareness is already recognized. Consumers are generally more comfortable purchasing items they are familiar with and working with companies they know and trust.
- Franchise companies usually provide extensive training and support to their franchisees in effort to help them succeed.
- Many times products and services are advertised at a local and national level by the main franchise companies. This practice helps boost sales for all franchisees, but individual franchisees don't absorb the cost.
Disadvantages:
- Franchises can be costly to implement. Also, many franchises charge ongoing royalties cutting into the profits of franchisees.
- Franchisors usually require franchisees to follow their operations manual to a tee in order to ensure consistency. This limits any creativity on the part of the franchisee.
- Franchisees must be very good at following directions in order to maintain the image and level of service already established. If the franchisee is not capable of running a quality business or does not have proper funding, this could curtail success.
Sometimes franchisors may be lax on their commitment to support the franchisee. Also, they may make poor decisions that would have an ill effect on the franchisee. Therefore, it is important to research any franchise concept thoroughly before signing any agreements.
It is suggested you contact a franchise consultant to discuss if franchising is right for you. You can visit FranchiseBuyersNetwork.com and click on the Franchise Consulting link to have a local franchise consultant contact you for a phone interview.
Advantages Disadvantages of Owning a Franchise - To learn more about this author, visit Don Daszkowski's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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 Don Daszkowski (Visit Don's Website) BusinessMart.com has become the fastest growing business for sale search engine, helping buyers and sellers of small businesses and franchises. BusinessMart.com has many resources to help you on your journey to start your own business, sell your existing business, browse busine sses for sale or open a franchise. FranchiseBuyersNetwork.com, which is owned and operated by Business Mart, Inc., helps individuals looking for information on franchise opportunities or business opportunities and guides them on a path to success!
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