If you’re considering buying a business, it could be worth considering whether a franchise is right for you, or whether you’d prefer to run an independent business.
There are pros and cons to both styles, and the best fit for you depends on a variety of factors. It’s important to consider what you hope to get out of your business and what’s most important to you.
We’ve compiled some information and advice about the advantages and disadvantages of franchising.
The Pros of owning a franchise
Tried and tested: When you buy into a franchise, much of the early grind of starting a business has been done already. Processes, pricing, procedures and products have all been developed, tested and refined. This helps you hit the ground running, and you can launch straight into your business venture with some confidence that it’s all be done, successfully, before.
You’re not alone: Operating a franchise means there’s always someone there to support you. From training to stock, form marketing to HR, a good franchisor will help you access and maximise the resources available. They want you to succeed, and will offer ongoing support. Being part of a franchise group also provides you with an immediate network of other business owners to learn from and lean on.
A known quantity: Buying into an already established brand through a franchise can help take advantage of an already established customer base, even in a new location. Buying into a big brand with a good reputation can be a great way to give your business a kick start.
The Cons
Limited autonomy: Buying a franchise means you have to be prepared to relinquish some control. Signing a franchise agreement commits you to following guidelines and requirements set out by the franchisor. While you own the business, you won’t have control of every decision. This might range from the locations in which you can operate your business to the pricing structure you use. If you crave maximum creativity and flexibility in running your business, franchising might not be for you.
The money stuff: The ongoing support and guidance a franchise offers comes at a cost. There are usually ongoing fees on top of the upfront price you will pay. They might be for training and marketing, along with a franchise fee and other levies. If business slows down or you have a quiet patch, these fees still need to be paid. Franchisor requirements may also reduce your ability to make savings in other areas, such as marketing, when times are tough.
Reputational risk: When you’re part of a franchise group, your business is exposed to the brand’s collective reputation. Poorly performing franchises can reflect badly on an entire brand, putting the reputation of your business out of your control. This is a critical factor for many when choosing a franchise.
If you’re someone who is looking for ongoing support, trusted and tested systems and want to get your business up and running quickly, then a franchise might be for you, especially if you choose a brand you can get behind. Someone looking for control, creativity and autonomy might be less attracted to this way of doing business. No matter what you decide, be sure to do your homework and carefully consider your strengths, your personal values and your lifestyle.
