The Pros and Cons of Buying a Franchise


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Just like starting any business, buying a franchise is a major decision—one that demands proper research first. Franchising offers many benefits to entrepreneurs, but it also has special requirements that might not be right for everyone.

PROS

Support system // Buying into a franchise takes a lot of the guesswork out of starting a business. The franchisor has already figured out what works and what doesn’t, from the best type of equipment to use to employee training. Thanks to the economies of scale at work, franchisors can often provide assistance with purchasing.

Established brand // Many franchises have national or even global recognition, which can help attract new customers. Franchisors often manage national advertising campaigns for the company, featuring professional and polished commercials, or offer support for local and regional advertising.

CONS

Fees and other costs // Franchisees are expected to pay a series of fees to their franchisors, which can change from a few thousand dollars to hundreds of thousands, the Federal Trade Commission reports. Some franchisors also require continuing royalty payments based on a franchisee’s gross income. And the franchisor can require franchisees to make renovations to their buildings.

Lack of independence // Franchises have very specific rules for their franchisees, covering even the most minute of details, and if you’re someone who likes to do things your own way, that can be very frustrating.

James Hart

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James Hart is the managing editor at Thinking Bigger Business Media.

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