To Open or Not to Open a Major Franchise Business
If you are tired of working for someone else and exploring opening and running your own small business, you are probably confused about the multitudes of available business possibilities. To make matters worse, authoritative voices differ in their opinions of whether opening a major franchise business is preferable to starting an independent business.
As an owner of nine franchise businesses, I have personally experienced the benefits as well as the limitations of opening and running franchise businesses. The following is a list of pros and cons of owning a major franchise business.
1.(Pro) Pre-existing building layouts and décor requirements lesson start-up confusion and facilitate quicker and easier start-ups.
Many pre-existing franchisors “The Franchise Giver – Big Daddy” usually equip their new franchisees “You – The Little Fish” with possible layout and decor drawings and requirement spec sheets, thus taking the guesswork and hassle out of trying to figure out how you are going to build-out and equip your new business.
2.(Con) Loss of creative control over business layout and décor appearance.
The benefit of being told where and how to build and place everything comes with loss of freedom you may want to express your creative decorative expression in your business. If you want to decorate your business with freedom, research the franchise décor rules and regulations before you purchase a franchise.
3.(Pro) Franchise agreements and structures set up to save you money on business, service or food products.
Because of the greater number of franchises, “Big Daddy” usually has arranged cheaper national contracts wherein you can get certain services, business or food products at a significantly reduced price. You get to save money.
4.(Con) The products and/or services you provide are regulated and controlled by “Big Daddy”.
These cheaper prices are usually accompanied with regulation and control by the franchisor as to what type of products and services you can or cannot purchase. In other words, “Big Daddy” tells you what you can or cannot buy and from whom.
5.(Pro) National Advertising included.
Well known, established franchises typically have a National Advertising campaign in place that provides TV, radio, and printed material advertising. This way, you don’t have to spend a lot of your own money locally advertising your business.
6.(Con) Loss of promotion/advertising freedom.
Great national advertising promotions are typically accompanied by blanket: “You will promote this product or service during this campaign” ruling. Hopefully, their advertising campaigns will make sense, won’t cost you too much money, and bring in more business. Sometimes it works and sometimes it doesn’t.
7.(Pro) Name recognition.
Who has not heard of Baskin Robbins, Subway or GNC? If you haven’t, you’ve been living in a cave. Franchises typically have wonderful name recognition benefits to them. In other words, people will actively seek out a particular franchise wherever they go.
8.(Con) Customer holds other franchise experiences against YOU.
If a customer has had a bad experience at one franchise location, he tends to hold all of the other franchise owners responsible for that one bad experience somewhere else. In other words, I’ll never go to another Subway because I didn’t like the meatball sub I got at Joe Blow’s location.
9.(Pro) Potential for higher sales.
With the national advertising campaigns and name recognition, your franchise business has a better potential for much higher sales than a similar business with a no-name, no experience rating history.
10.(Con) Handing over a percentage of your sales to “Big Daddy”.
Yeah, higher sales! But ouch, you have to hand a large bulk of your sales over to “Big Daddy”. For every dollar you earn, your franchise fee rips away anywhere from .04¢ to .25¢. Pull your wallet out and hand it over to “Big Daddy”.
As with any situation in life, there are resulting pros and cons. Simply study the nature of the franchises completely and talk to other franchise owners to get a feel of whether you will want to purchase that particular franchise. If it’s a good fit, go for it!
Good luck and good business!
As an owner of nine franchise businesses, I have personally experienced the benefits as well as the limitations of opening and running franchise businesses. The following is a list of pros and cons of owning a major franchise business.
1.(Pro) Pre-existing building layouts and décor requirements lesson start-up confusion and facilitate quicker and easier start-ups.
Many pre-existing franchisors “The Franchise Giver – Big Daddy” usually equip their new franchisees “You – The Little Fish” with possible layout and decor drawings and requirement spec sheets, thus taking the guesswork and hassle out of trying to figure out how you are going to build-out and equip your new business.
2.(Con) Loss of creative control over business layout and décor appearance.
The benefit of being told where and how to build and place everything comes with loss of freedom you may want to express your creative decorative expression in your business. If you want to decorate your business with freedom, research the franchise décor rules and regulations before you purchase a franchise.
3.(Pro) Franchise agreements and structures set up to save you money on business, service or food products.
Because of the greater number of franchises, “Big Daddy” usually has arranged cheaper national contracts wherein you can get certain services, business or food products at a significantly reduced price. You get to save money.
4.(Con) The products and/or services you provide are regulated and controlled by “Big Daddy”.
These cheaper prices are usually accompanied with regulation and control by the franchisor as to what type of products and services you can or cannot purchase. In other words, “Big Daddy” tells you what you can or cannot buy and from whom.
5.(Pro) National Advertising included.
Well known, established franchises typically have a National Advertising campaign in place that provides TV, radio, and printed material advertising. This way, you don’t have to spend a lot of your own money locally advertising your business.
6.(Con) Loss of promotion/advertising freedom.
Great national advertising promotions are typically accompanied by blanket: “You will promote this product or service during this campaign” ruling. Hopefully, their advertising campaigns will make sense, won’t cost you too much money, and bring in more business. Sometimes it works and sometimes it doesn’t.
7.(Pro) Name recognition.
Who has not heard of Baskin Robbins, Subway or GNC? If you haven’t, you’ve been living in a cave. Franchises typically have wonderful name recognition benefits to them. In other words, people will actively seek out a particular franchise wherever they go.
8.(Con) Customer holds other franchise experiences against YOU.
If a customer has had a bad experience at one franchise location, he tends to hold all of the other franchise owners responsible for that one bad experience somewhere else. In other words, I’ll never go to another Subway because I didn’t like the meatball sub I got at Joe Blow’s location.
9.(Pro) Potential for higher sales.
With the national advertising campaigns and name recognition, your franchise business has a better potential for much higher sales than a similar business with a no-name, no experience rating history.
10.(Con) Handing over a percentage of your sales to “Big Daddy”.
Yeah, higher sales! But ouch, you have to hand a large bulk of your sales over to “Big Daddy”. For every dollar you earn, your franchise fee rips away anywhere from .04¢ to .25¢. Pull your wallet out and hand it over to “Big Daddy”.
As with any situation in life, there are resulting pros and cons. Simply study the nature of the franchises completely and talk to other franchise owners to get a feel of whether you will want to purchase that particular franchise. If it’s a good fit, go for it!
Good luck and good business!
by: Ronya Banks
About the Author
As a Mind Power Leadership coach, trainer, and speaker, Ronya Banks has helped others become leaders and business owners since 1992. Frequently featured in radio, magazine and newspaper articles and interviews, Ronya helps you find the great leader within by accessing the natural power of your minds. Discover more of Ronya’s proven leadership success secrets by subscribing to her Mind Power Leadership ezine newsletter at: http://www.livinginaction.com/newsletter.cfm.
posted by Paul V at 11:28 AM
16 Comments:
Thanks for writing this.
With these pros and cons pointed out, it is still certain that business franchising has a very high rate of success, especially when carefully planned. Despite the brand already established, online presence should continue its strength, especially in today's competitive standpoint. Reaching out to bigger market in an efficient way can be done through the web.
I have read these all pro and cons very carefully and also you have share a very fact thing about a franchise business. It's a fact thing that franchise business help to gain a potential higher sales but also need to own this business perfect way because it will be a fail also.
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There are so many business ideas that are out there waiting for enterprising individuals to exploit. Although franchises are common with retail businesses they however do exist in many industries and markets including manufacturing.
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Thank you for sharing and for this nice information. I really appreciate your work, keep it up.
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Sometimes it can be helps to get a major franchise and open it's business because it's name can benefit you but it's always better to start your own.
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Starting franchise business is not tough but you should have to do well business planning. Buying a franchise company is expected to be the least less risk way to begin a company.
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It is definitely best to start with franchise business which is affordable to maintain and start. You can also go for purchasing a new franchise which has been just started in case of bargain is good.
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Thanks to explain all pros and cons according the franchise business are great. It’s providing help to understand the franchise business for person who’s interested in open new business not for present but regarding future aspect also. If you are interested to open franchise in Australia, new-business-franchise is provides best option for cheap franchise australia.
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