People who want to become entrepreneurs often choose between starting their own business and buying a franchise, and some end up opting for the latter. This isn’t really surprising since becoming a franchisee has its own benefits but, if you decide to become one, take note that you’ll also have to face several drawbacks. To learn more about this topic, browse through the pros and cons of buying a franchise.
List of Pros of Buying a Franchise
1. It lets you invest in a tried-and-tested idea.
Entrepreneurs cannot sell their business as a franchise if they don’t first prove that it actually can earn money. If McDonald’s or Burger King can’t attract diners, for example, nobody will want to buy a franchise from them. So, when you become a franchisee, you almost always have the assurance that your business will be successful since its past performance can speak for itself.
2. It allows you to tap in an existing market.
One of the biggest challenges of starting a new business is creating a client base. People naturally aren’t aware that your venture exists and, if they are, they won’t easily trust you and hand you their money. This isn’t the case when you buy a franchise; the franchiser has already done the hard work by building a brand and creating a target market, so the only thing you should do is to tap into it.
3. It ensures that you get guidance and support.
If you’re starting your own business, you’ll have no one else to turn to but yourself (plus a couple of mentors if you’re lucky). But, if you buy a franchise, you’ll have the support of the franchiser from day one up until the end. As a result, you’ll have someone who’ll teach you the ropes, ensure you won’t make a lot of mistakes, and give you advice on how to manage your business.
List of Cons of Buying a Franchise
1. It prohibits entrepreneurial freedom.
Having the franchiser to guide you is great when you’re still starting out. But, once you can stand on your own feet, you may find that it’s actually quite prohibiting. There’s no room for you to experiment with various ideas since the franchise has strict rules that you should adhere to, which can stifle your creativity and make you feel suffocated.
2. It can be expensive.
Building a small business requires a relatively small amount of funds, and you can even lower your overheads if you know what to do. Buying a franchise, however, requires you to hand over a substantial amount of money to the franchiser before you can have a business and call yourself a business owner.
3. It doesn’t always guarantee success.
Buying a franchise won’t automatically make you a millionaire. In fact, it can lead to danger particularly if the company isn’t well-managed, causing your venture (and your investment) to fall down. Sbarro and RadioShack are two examples of once-popular franchise businesses that had to close many stores because the franchise owners weren’t able to keep up with their debt.
Buying a franchise always comes with a risk. The key here is to weigh the pros and cons carefully to ensure you’re making the right decision.
Natalie Regoli is a seasoned writer, who is also our editor-in-chief. Our goal at Green Garage is to publish the most in depth content on the internet for every topic we write about. If you would like to reach out to contact Natalie, then go here to send her a message.