The Pros and Cons of Starting a Franchise
Great! You’ve decided to go in for a franchise. But before you make that big leap, take a few minutes to consider the whole thing through and through. As with any enterprise, there are pros and cons of starting a franchise business. At the end of it, you should be able to answer the question – do the benefits outweigh the disadvantages?
The Pros:
Since you will be taking on a venture that is already a proven success elsewhere, you can bet that there are many advantages to it. Let us take a look at what they are:
o You will represent an established brand, and be part of a defined operating system and management structure. You will not have to do any guesswork on whether this idea is going to work for you. Guess what, it is working and has been doing so for a while!
o Let’s move on to a key fact - the failure rate of franchises is very low. Compare this: In the U. S., only about 5% of all franchise systems fail each year, while 30 to 35% of independent businesses fail within the first year. Smiling already?
o You are part of an established network of franchisee associates, who can help generate new ideas and provide additional support. What’s more, they act as a yardstick for you to measure your progress.
o Learn from others’ mistakes! The mistakes have already been made and the pitfalls overcome. All you have to do is tap into the franchisor’s expertise, training resources and support instead of relying on your own judgment.
o No advertising, no marketing pains! The products are already well known and you are riding on the coattails of someone else’s hard work. This is one of the greatest joys of starting a franchise.
o Success begets more success! With franchise success comes potential for growth within the organization, such as opportunities to purchase additional outlets with special, pre-financed conditions.
o If ever you decide you want out, you will surely be able to find a lot of people willing to buy an on-going business.
The Cons:
Okay, we are now done with the positives. Let us spend a few minutes on the inherent problems of starting a franchise. As with everything else in life, franchising comes with its share of pain.
o You will not be your own boss. If you have always wanted to be completely independent then starting a franchise is not your cup of tea. You will never be fully independent to take your own decisions.
o You will not be able to make changes to the operations in the franchise. You have to follow the tried and tested method. There is no scope for innovation.
o You have to pay a royalty fee based on a percentage of your monthly sales.
o If any of the other sister franchises generate negative publicity or media attention, your franchise will also suffer the backlash from such allegations.
o It is more expensive to buy a franchise than starting your own independent venture – about 40% more!
o You will be bound by a contract with many terms and conditions. Learn to read the fine print.
That being said, it is now up to you to take that final step. Make that decision after careful thought and considering all the aspects. Once you have made that decision, go for it. Best of luck!
Hi, I'm Akhil Shahani, a serial entrepreneur who wants to help you succeed. If you like to work smart, check out http://www.SmartEntrepreneur.net . It's full of articles and resources to help you start and grow your business successfully. Please visit us & download our special "Freebie of The Month" at
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