Sunday, July 26, 2015

What are the advantages and disadvangtages of starting a franchise business? -

As a franchise consultant, one of the most important questions any first-time potential business owner asks me is whether to start their own new venture or to look at franchising. The answer has many components attached to it that need attention. Let s review some of those considerations.Starting up a new mom and pop type business is statistically very risky. Numerous studies have been conducted on this subject, and the general consensus indicates that 90-95% of new independents fail within two or three years. The steep learning curve that is involved can be a killer all by itself. The few who do succeed in this business model typically have an extremely high level of expertise in their product or service. They ve lived it all their lives. When it comes to franchising, however, much of the risk is reduced, or even eliminated. Although there are no guarantees, this business model is as close as you ll come to a guarantee of success. The same studies show that new franchise business startups rarely fail. The reason for this, quite simply, is because the often very long exercise of trial and error has already been done so many times that it s reached the inevitable point of trying and succeeding. The franchiser has made it through the learning curve and, along the way, has developed the success secrets for that business. Those who fail in franchising almost always were not committed to following the franchiser s systems. The main reason you buy a franchise is to minimize risk and to set yourself up for success. Traditionally, in a new startup, independent business, you are almost always operating from a shoot from the hip mentality, which can lead to failure. There is no past experience to draw upon, and it becomes challenging to control all aspects of the business. With a good, successful franchise model, you open yourself up to a deluge of information regarding all aspects of information, including financial assistance, site selection, and a wealth of knowledge from existing franchisees. Also, rapid growth is inevitable with the franchise model, which is only a good thing for a franchisee for many reasons, such as increased name/brand recognition and exposure to national advertising campaigns, which increase sales. Tremendous buying power because of constant expansion is also a major plus. Of course, the key is to follow the proven system of success, so your creativity can be somewhat lessened. In addition, you will have to pay a franchise fee and an ongoing royality, and your individual ability to make changes to the franchise is reduced dramatically. To summarize, franchising greatly reduces risk, enables you to follow a proven, successful system, and increases your chances of success in business exponentially. I ve written numerous articles on franchising which may be of further assistance to you: http://EzineArticles.com/?expert=Cory_Ba��

The main advantages of buying into a franchise as a small business are the large name(it s familiarity with the general public), free or low cost training and materials. Main disadvantages are that you are signing in to a binding contract so you will owe the franchisor even if you go belly up, Paper work up the wahoo, you must obey certain guidelines, it s not a true property of your own.

Advantages:Proven business modelImmediate name recognitionPlanning and implementation support from the franchise headquartersDisadvantages:Initial costRoyalties paid to the franchise headquartersLack of flexibility (If you wish to depart from the business model of the franchise, you might find yourself in violation of the franchise agreement.)

Davide405s answer was right on, but I just wanted to add one advantage. Banks are typically more willing to loan money to open a franchise business, because of the proven business model and support you receive.

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