Consider the pros and cons of franchising before all else
Pros and Cons of Franchising
Franchising Spans the Globe
Franchising today is truly an international industry offering almost limitless inspiration for entrepreneurs in search of new opportunities.
U.S. franchise systems remain by far the most globalized, but franchise systems from other countries are also taking root in North America.
Almost any place in the United States and in many parts of the world that you travel, you’ll encounter countless franchise-based businesses. They're everywhere!
There are a lot of pros and cons of franchising
With these businesses so prevalent in our everyday lives, it’s easy to jump to the conclusion that they’re extremely profitable, easy to operate, and guaranteed to be successful. That’s not always the case. Not all franchises are successful. Not all are profitable, and many fail.
Pros and Cons of Franchising -- Franchise Ownership
As an entrepreneur, or small business owner, you are that business. As a franchisee you are part of a network of businesses and can rely on and draw on the strengths, success, and ideas of that particular franchise.
Owning a franchise, like owning any small business, is hard work. Even though you get proven systems and training when you hook up with a solid franchisor, no one guarantees your success. Most often, the variable, in this equation is you. Even with the best franchise system and the most popular brand name, the franchisee is often the key ingredient to making the business successful. Even with hard work, if you make the wrong choice and buy a franchise that you end up hating, chances are good that you won’t be successful, or very happy.
Pros and Cons of Franchising --Success in franchising is based on mutual dependence
If a franchise is unsuccessful, the franchisor as well as the franchisee who fails, will suffer. Not only does the franchise unit fail to produce an ongoing revenue stream for the franchisor, but it can also take up a tremendous amount of the franchisor's time and effort to either salvage or resell the franchise. Reputable franchisors go to great lengths to select an appropriate franchisee. Likewise, franchisees by planning ahead and thoroughly researching every aspect of the business system they are considering, lower the risk of failure and present a better chance for success.
Pros and Cons of Franchising -- Franchise operation
As a franchisee, you must adhere to the rules and regulations that the franchisor sets out in the franchise agreement. It's essential to understand this. Franchising by its very nature assumes that franchisees will conform to the business methods, rules and regulations that have been developed and are maintained by the franchisor.
This is an important consideration. While many franchisors welcome new ideas and suggestions from their franchisees, the bottom line is that franchisees generally are not free to implement those ideas unless they have an agreement from their franchisor.
Franchisors definitely want to attract franchisees who can create new ideas, especially in heavily competitive market sectors. In some systems, novel advertising concepts - especially those that can be adapted in local markets - have been suggested by individual franchisees. In addition, many franchise systems have franchise associations that are designed in part to bring new ideas and strategies to the attention of the franchisor.
Pros and Cons of Franchising -- As a franchisee
It is essential to practice due diligence when considering a franchise to ensure the franchise concept and system are solid. Make sure the franchise you have in mind interest you, will help you meet your goals and that you have an interest in and aptitude for the work.
The type of business you ultimately pursue will directly impact how you spend your time, what your work environment is like, the types of demands put on you, what types of risks you’ll need to take, and what your overall experience will be like.
The best way to determine what to expect from the type of experience you will have as far as a franchisee is to speak with other franchisees currently involved in the type of business venture you’re interested in. Be sure to get an overall sense of the franchisees' level of satisfaction from the franchisor and the relationship they have.
The good news is...
Franchising is a part of the national economy and presents a better chance for success to the new franchisee. Not every franchise is a surefire way to multiply your savings and provide you with an enjoyable occupation, however, franchising, when done right and entered into with eyes open, can be a profitable, highly enjoyable way to spend your future.
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