If you’re thinking about starting a business, one of the questions you face is: do you start your own concept or take ‘done for you’ approach and join a franchise?.
There’ve been some very successful franchises, from McDonalds through to the Jim’s Mowing (and Cleaning, and Computer Repairs…). Franchises generally offer more structure and support, but that also limits your freedom. Going it alone gives you that freedom, but without the support and resources.
Here are a few points to consider if you’re thinking about taking the franchising route.
Pros of joining a franchise
– Documented systems and processes which allow for a turnkey solution – Franchises provide the advice and process around the entire start up, from insurance to logos.
– Support and training – A major advantage if you’re new to running a business. Most of the larger and more credible franchisors provide Business Managers to support their franchisees. However many small to mid size franchisors don’t, often giving you the sense that you’re still alone.
– Marketing help – You’ve got a known name that you can attach your business to. Bear in mind that, in addition to the money you put in the pool for national branding, you may still be expected to spend additional funds on local advertising.
Cons of joining a franchise
– You are restricted in what you can do– your Franchise Agreement will dictate the terms in which you can operate. For example, it will set out trade zones, use of the brand in advertising, pricing, training and meeting requirements, levels of innovation and compliance etc. When you choose to go it along, you make all the decisions, reap all the rewards (and bear all the consequences)
– Franchising will continue to cost you money– the franchise model costs you money from the start via an initial fee and will continue to do so. Just some of these expenses include raining fees, weekly or monthly royalties, marketing levies, possible supply chain fees.
These are a few pros and cons that are typical to the franchise structure. But this is only the big picture. You need to do your research on whether the benefits I’ve outlined are part of the package for the particular franchise you’re considering. So in the next article, I will review the Characteristics of a ‘good’ franchise relationship.
Best of luck in your decision….Tony
P.S. To get your FREE Report titled ‘7 Reasons Franchise Businesses Fail’ Click Link
Ozanne is an experienced Business Coach and Strategic Advisor to small to medium businesses across Australia. With experience on both sides of the franchising spectrum spending 23 years with the world’s largest restaurant chain Yum Restaurants International before becoming a franchisee himself when starting his coaching practice, he has seen the good, the bad and the ugly of the industry. Using his vast experience in this sector Tony now helps business owners build systems, process and planning into their model.
