Pros and Cons of Franchising
Before searching for a franchise, you should know the
advantages and disadvantages of purchasing a franchise and
understand the implications of buying and operating one.
You should know that although franchising
is a proven business model, purchasing a franchise is not a
guarantee of success.
Here are some common aspects of franchises
that could be either an advantage or disadvantage depending upon
your individual needs and preferences:
- If you are an entrepreneurial or highly creative person,
then you may find some aspects of franchising restrictive. This
doesnít mean that a franchisee canít be creative. It means that
there is a structure to a franchise whereby new ideas and
concepts need to remain within certain limits. Following the
"program" is the most important aspect of a franchise business.
Franchises by their very nature require conformity and
consistency in order to be successful. If you are a strong
willed individual who doesnít like to deviate from your own
feelings or attitudes then you may find franchising difficult to
- Youíll be operating under a contract or agreement. Your
conduct and behavior as a business owner will be governed by an
operations manual and a franchise agreement. The overall
operation of your franchise must conform to the requirements of
these documents. Keep this in mind when performing your due
diligence on any franchise you're interested in purchasing...
You don't want to part of a franchise program you are not happy
- Franchising offers a number of benefits, not the least of
which is being your own boss. Despite the numerous advantages
that a franchise can provide, success will be the result of your
hard work. Some people buy a franchise with the expectation that
they can work 9 to 5. In the majority of cases this is wrong. Be
prepared to work long hours especially during the first few
years. Although there are exceptions, these are rare.
- Problems can arise, which can require you to invest
additional capital in your business. Since it is your business
and youíre not operating a publicly traded company, you wonít
have ready access to investment capital from banks or other
- Investing in a franchise has financial risk and not all
franchise opportunities are created equal. There are flawed
franchise systems and even in successful franchise systems not
all franchisees are successful. Itís important to identify and
avoid the flawed franchise programs.
- Part of your expectations when you purchase a franchise is
that you'll get a certain amount of training and support. In
fact, one of the key advantages of buying a franchise over
buying or starting an independent business, is the
training and support. Since your initial franchise fee and
on-going royalty payments are partially to pay for these
services, you want to be sure you'll receive what you expect.
Ask the franchisor for details of their training and support
program. Then contact existing franchisees and ask them to tell
you about the training they received. Remember, lack of training
or poor training put you at a disadvantage. If the existing
franchisees weren't satisfied with the training and support,
chances are you won't be, either.
This article is excerpted from The
Franchise Buyers Manual. Itís available
© 2015 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating
Officer, FranchiseGrade.com. He is a former
franchise executive and franchisee. He can be contacted at 631-246-5782 or