When looking for new business or investment opportunities, many look toward owning successful franchises as the way to go.
Just think, the brand is already established, the basic business model is set, and there is basically a blueprint laid for you to follow—sounds simple enough. What may not be as obvious to you, however, is the unique set of challenges that come along with opening your addition to a franchise.
BlackEnterprise.com offers a few of the pros and cons to weigh to determine if franchising is right for.
Pros: Well, this can be pretty obvious.
- You have an established brand, product or service, and method with marketing support.
- The relationships with suppliers are generally already there, so that’s one thing to leave off the list.
- You may be trained by the establishment on management and technical support.
- Financing can be easier, as some franchises may offer loans to help get you off the ground.
- Less stress—the heavy lifting is done for you. Time for a new product? Your franchise generally has you covered.
- The risk may be lower as the burden of creating something out of nothing doesn’t fall, solely, on you.
Cons: Even with all that up, there are a few downs.
- Sometimes the initial pay-out (such as franchise fees and start-up costs) can be more than what you’d pay to build your own business from the ground.
- You have less control over the product and the process. Oh, trust and believe that if a highly-recognized company allows you to franchise, they will have their expectations — quite a few of them — that you must adhere to at all costs.
- You imagination/creativity may be limited. It isn’t impossible to incorporate new products/services/ways of doing things into a franchise, but it may not be a simply ‘flick of the switch’ either. Making changes takes negotiations that you’d otherwise not have to face.
- You must pay royalties and advertising fees—this decreases your profit potential.
- If the franchise as a whole takes a hit, so does your business. Bad PR for the brand is bad PR for you.
- Your franchise may be terminated. Franchise agreements have terms and the duration of that term is not necessarily up to you.
Learn more about the opportunities in franchising from the owner of 2 highly successful Wing Stops, Tina Howell, at the 2016 BE Entrepreneurs Summit, May 4-7, Loews Hotel Miami, Miami, Florida. Register now. Be sure to follow Black Enterprise on social media @BlackEnterprise for Entrepreneur Summit news, highlights, and updates.