Starting up a new business is a defining and potentially life-changing decision. There are several choices to make when you decide that you want to go into business and be your own boss. Selecting the industry that you want to work in, the kind of image that you wish to portray and whether or not to invest in a franchise or be an independent trader are all prominent questions that will dominate your thought process.
There are many kinds of franchise opportunities available, such as food franchises, van franchises, fitness franchises, home-based franchises and many more. If operating a franchise is potentially for you, take some time to consider the benefits and drawbacks of investing in a franchise before you make your final decision as to whether to invest in a franchise business.
High profits in reasonably short time
One of the key benefits of starting a franchise is that your earning potential begins right at the very start. With a franchise, you are likely to already have customers that want to visit you because they trust the brand that is behind your business. This means that you will not have to wait to build up your reputation before seeing a financial reward from your investment.
Ongoing training and support
Starting a new business can be daunting and terrifying when you are doing it alone, but with a franchise, you will have training and support provided for you by your franchisor. Consequently, you can access advice, comprehensive support and even troubleshooting solutions in the event of something going wrong. Essentially, you are more protected and less alone than if you were running an independent start-up business.
Current brand recognition
A significant part of your investment in a franchise is based on brand recognition. You are essentially purchasing an established brand that customers know, trust and want to use. For a franchisee, this is a profoundly attractive proposition because it means that you will not have to devise intricate marketing schemes of your own, nor will you have to spend hours creating logos and slogans for your brand as it has all been done for you by your franchisor. This brand recognition also means that there is less risk involved when you purchase a franchise compared to starting up a new independent business of your own as you’re buying into a stable business.
Structured model to follow
A franchisor has a structured business model for franchisees to follow. From the logo to the colour scheme to the marketing and advertising, you will have a plan and all the groundwork laid out for you, reducing stress and allowing you to focus on your individual business rather than other tasks.
Being your own boss gives you flexibility
When you go into business and become your own boss, you are no longer at the mercy of others. You can set your own hours, make your own decisions and achieve an improved work-life balance. You may be able to spend significantly more time with your family, especially if you choose to work part-time hours and delegate certain duties to your staff. You will have the choice as to the type of franchise you invest in, how you run and it and whether or not to rent premises or work from home. You can adapt your business to your lifestyle.
Following someone else’s structure
Designing your business around someone else’s business model is a pro that can also be a con, depending on your perspective. For some people, it can make starting a business a lot easier, smoother and stress-free. However, it does also have the potential to feel restrictive and limit your overall flexibility. A franchisor may set certain rules about the business model that you cannot bend or break meaning that you cannot be completely creative in your setup.
Sharing your profits
Although franchises can reap exceptional profit margins for franchisees, the franchisor may be entitled to a share of those profits, reducing your overall earnings. This can deter some people from investing in a franchise as it could feel like you are the one doing the legwork at ground level.
High investment costs
Some franchises, though not all, are very expensive to invest in. Despite the extensive financial rewards that can subsequently be gained by a franchisee, if you do not have the liquid capital upfront or if you are not eligible to secure a loan to help, then you may not be able to invest in certain franchises.
Your business can be affected by your counterparts
If another franchisee in the same franchise performs poorly, tarnishes the brand name or causes a scandal of any kind, that can impact directly on your business because customers will associate any bad press with the brand name. In these circumstances, it would understandably be extremely frustrating as you are essentially running your business independently from other franchisees.