Tuesday, March 19, 2013

What are the pros and cons of purchasing a franchise?

  • Brand name. Many franchises have national brand name recognition. This means great savings, because the product you are selling is already well known by the customers.
  • Experience is not a problem. Franchises succeed based on a system of operation that has already been proven, so there is not necessary to have experience in the domain since the franchiser provides you with all the necessary tools you need in order to make your business profitable. It’s in the interest of the franchiser to make sure the business goes well in order to keep up the good name of his brand, which is why he will help you with the account management, the sales, and even training if necessary.
  • Staff recruiting. Staff is essential for the business’s success. When it comes to staff recruiting it is easier to find experienced capable employees because a business with well known brand name has greater chance to attract employees than a unknown fresh-started business.
  • Less risk. Being part of a wide-known organization, with a well known brand name, there is a smaller risk of failure, since there are already customers that are familiar with the brand and product, and will buy it. Also the franchiser will give you all the support you need in order to make the business profitable.

  • Limited freedom.  The franchisees have the obligation to share information and to stick  to the  uniform procedures of operating.. The franchisee has to stick with the rules and the guidelines imposed by the franchiser or else there is the risk of losing the franchise.
  • Leadership skills.  It’s often required to have the ability to lead a staff, which means you must be able to handle the process of hiring and firing people, as well as being able o pull off difficult and stressful situations if necessary.
  • Financial capabilities.  Up-front franchise financing can be very costly. Even though it pays off, it usually take up to a year or longer to break even.
  • Royalty payments. Franchises have to make royal payments every year in order to show their gratitude for the support in advertising and operations.
  • Resources.  Being part of a big organization also means taking some risks. Some of the  franchisers do not provide you with all the resources you need for a specific location.
  • Industry interest. In order to succeed in this industry you must show a high interest, since it involves a long time commitment. Also you must be disposed to confirm to a set of rules and guidelines required by the franchiser.

You will have to consider both pros and cons before deciding if you want or do not want to join the franchising industry. It is very important to analyze all the facts in order to be able to make the right decision, because no matter what you choose it’s going to affect your career as well as your financial

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1 comment:

  1. Purchasing a franchise is much simpler. One has to consider some factors How Well Has The Franchisor Performed and What Happens When You Want To Sell-Out, highly is it Controlled, and Is The Asking Price Fair.

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