To Franchise or Not To Franchise

To Franchise or Not To Franchise

Benefits of Franchising

• Less risk - Franchise businesses have developed and refined their services, products and operations in great detail. As a result, they have been tried and tested and often have a strong track-record of success. In general, there is considerably less risk involved in purchasing a home-based franchise than starting your own original business.
  
  
• Support - You will not be alone. Franchisors want their franchisees to be successful. Many franchises offer toll-free support lines for their franchisees to call when support is needed. Often there are opportunities for ongoing training in addition to the initial training you will receive.
  
  
• Established Business Protocol - You will be provided with an operations manual and training so that you have the tools to run your new home-business.
  
  
• Name Recognition - Franchisees benefit from national advertising and brand awareness campaigns that provide a definite edge over original, individual businesses. Potential customers may already be familiar with your product and/or service simply through awareness of the franchise name and brand.
  
  
• Easier Financing - Even if the franchise company does not have its own financing program (which some do) they will certainly have advice on where to find it. The proven business system of a franchise may look much more appealing to a lending agency than an original start-up home-business idea.
  
  
• Collective Buying Power - Franchisees can often buy lower cost goods and supplies from their relationship with the franchisor and its vendors. This means added savings for your business and higher profits.
  
  
• Consistency - Because the service or product of a successful franchise is consistent and uniform, both customers and franchisees know what to expect.
  
  
• Marketing and Site Guidance - Again, you are never alone. You will join a collective pool for both regional and national marketing with the franchisor.
  
  
• Security in Economic Hard Times - It has been seen many times that franchises hold up better than other businesses in hard economic times. Consumers tend to support what is familiar and consistent.
  
  

Drawbacks to Franchising

• Loss of Choice - If you are a very independent person with many creative ideas , it may be hard to follow the established operational requirements of a home-franchise system.
  
  
• Initial Franchise Fees - This is the initial payment you may make to a franchise company to buy into their business system. Franchise fees vary from company to company. One franchisor may not have an initial fee at all while another may require a sizeable investment.
  
  
• Controls - Franchisors control how each business is conducted in varying degrees. They may control the site for an outlet, design or appearance standards, what products and/or services can be sold, how the business is operated, and sometimes even the territory where you can conduct business. Some people may be averse to this degree of control over their home-business.
  
  
• Continuing Royalty Payments - Often, as agreed upon in your contract, a percentage of your weekly or monthly gross revenue will need to be paid to the franchisor.
  
  
• Terminations - You can lose the right to operate the home-franchise if you breech the contract with the franchisor.
  
  
• Required Purchases - Sometimes you are required to purchase supplies or inventory from a specific vendor to ensure uniformity. Even if you find a similar product from another source at a lower cost, you may not be able to purchase from that source.
  
  
• Legal/Contractual Commitment - Research potential home-based franchise business opportunities very thoroughly. You don't what to end up legally committed to a franchise that does not fulfill your needs and expectations.
  
  

As a final note, it is extremely important to know yourself - your strengths and weaknesses, your goals and your skills - as you embark on the process of creating your own work from home business opportunity. Gather as much information as possible, weigh all the pros and cons, and try to create a realistic view of the potential for each business opportunity and/or franchise you consider.