Starting a new business is a dream come true for anyone. Yet it’s not easy to embark on a new business, considering the exhaustive efforts and capital required. An appealing option aspiring entrepreneurs may consider is franchise ownership.
Franchising offers an excellent chance for would-be entrepreneurs to start your business without significant risk as opposed to starting a business from scratch. You can take on an already established business name and bring your unique dimensions to it. But, before you make a decision, it’s vital to consider the pros and cons of franchising. Here, they are.
Advantages of Franchising
One of the biggest challenges when starting a business from scratch is building a loyal customer base. With a franchise, you can get a head-start by taking off from the chain’s already established clientele and provide a service that the customer is aware of and loves.
Several franchising brands offer extensive support when opening a new center, such as site selection, design, or a dedicated support team. On the other hand, when opening an independent business, you are pretty much on your own and have to do everything by yourself, which can be a big challenge and drain on your resources.
- Lower Risk
When considering the pros and cons of franchising, it’s vital to understand the risk involved in investing. Franchises have the backing of a larger, established corporation with tried and tested business models that have proven themselves to be effective.
They are a more secure investment than starting off your business on your own that is yet to build its presence in the market. Moreover, getting a loan for a franchise business is easier than getting a loan for an independent business idea.
- Collective Buying Power
Searching for reliable suppliers and forging a relationship with them is another major challenge when starting a new business. But, with a franchising opportunity, you can leverage the already established franchise’s network of suppliers and order raw materials for relatively lesser costs than establishing an independent operation.
If you’ve thought of pivoting from your current career to pursue entrepreneurship in a new field, franchising can be the right choice for you. You can benefit from the franchisor’s training program from the outset and ongoing training regimes to gain expertise in running the business in an unfamiliar field of operation.
Disadvantages of Franchising
- Initial Investment Can Be High
Depending on what you choose, the initial investment can be hefty. However, there are several types of franchises that come with different cost models to suit any budget. So, ensure to do your research and consider your budget before making the right decision.
- Lesser Scope for Creativity
Since franchises already have a pre-established brand association, there can be restrictions on the design, type of products, and the suppliers you can use for the predetermined business model. It might not be possible to experiment or alter the company’s brand.
Before you decide to take the plunge, weigh the pros and cons of franchising to determine if franchising is the right action for you instead of an independent operation.