Owning a franchise can be a great way to break into the world of entrepreneurship. However, franchising isn’t for everyone. It’s best to review the possible pros and cons of franchising before making any commitments.
Potential Advantages
- Mentorship: Most franchisors offer some managerial coaching to new franchisees.
- Trusted brand and/or product or service: Many franchises offer a brand and/or product or service that is typically recognized by your target market.
- Time-tested operating system: With the purchase of a franchise comes an operating system that ideally has been tried and proven through the years.
- Group purchasing power: Most franchisors have contracts with suppliers, providing the cost benefits of buying in bulk.
- Advertising and marketing: After paying a small percentage of gross profits to the franchisor, franchisees can usually take advantage of professionally created campaigns launched by the franchisor.
- Financial help: Some franchisors will provide assistance to new franchisees in securing financing.
Potential Disadvantages
- Fees: In addition to the upfront franchise fee, there may be ongoing royalties and, as mentioned above, advertising fees, which are typically required even if you don’t like or want to utilize the campaigns.
- Control: You will generally have to abide by the many restrictions set by the franchisor. These can affect operations, types of goods sold, vendor relationships, marketing strategies, geographic location, and even website content/presence, among other key management decisions.
- Renewal policies: Franchises are generally governed under a contract with an end date, and franchisors may choose not to renew at the time of expiration or may decide to raise fees or impose new restrictions upon renewal.
For more information, visit the Bureau of Consumer Protection website and review “Buying a Franchise: A Consumer Guide.” You may also contact the experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
