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Franchise Business: Do You Really Need It? This Will Help You Decide!

Updated: Jul 9, 2021

Starting a business by acquiring a franchise has an obvious appeal to it. While starting a business from scratch usually comes with a lot of speculation, a franchise is proof of an excelling business model already in motion. However, buying a franchise does not mean guaranteed success. Indeed, the misconception that franchisees have a lower failure rate than other businesses is exactly that: a myth.

If you're thinking about buying a franchise, be sure you understand what you're getting yourself into. Here's a list of the pros and cons of purchasing a franchise:


Pros of Buying a Franchise

Suppose you already have a franchise in mind - a particular type of business in demand but lacking in your area., or a brand that you really believe in and want to be a part of. Irrespective of which franchise you want to be a part of, know that it mostly comes with the following benefits.


Avoid the hassle of start-ups

The hardest thing to do is to write business plans, carry out research on the markets, create a minimum product that is viable, test that product, and then scale a company (if testing goes well, that is). This part can be skipped if you buy a franchise: The system has already been put to the test and proven to be effective. Now it's up to you to put their system to work in your market.


Instant Brand Awareness

Franchises have a name that people know and trust beforehand. It's incredibly difficult for customers to recognize their brand—but there is a nationwide name for a franchise. There is no question for customers to wonder what they're going to get by entering a KFC or a Pizza Hut. This is a precious added value.


Expert Training

A major part of the success of a franchise is its easily replicable system which includes training staff everywhere in the way business is carried out. You'll be helped to bring new recruits up to speed, often with training on-site about opening operations, day-to-day operations, point-of-sale software, and more.


Assistance With Marketing And Advertising

Although you may be needed to contribute time and resources in marketing and advertising as a franchisee, the franchises will promote your firm through nationwide campaigns.


You'll get advice and guidance from the franchisor on how to create and execute successful campaigns of your own. They may provide a marketing plan that includes a market study, strategy, sales projection, and budget, depending on their size and resources.


Access to Important Assets at a Reduced Cost

Big corporations clearly have a competitive edge over small enterprises in terms of purchasing power. The franchise may purchase huge amounts of goods and equipment on behalf of its franchisees, lowering the cost of these valuable assets for you.


Cons of Buying a Franchise

Purchasing a franchise has its own set of challenges and disadvantages. Because no business or business strategy is perfect, it's crucial to understand what you'll be dealing with if you decide to buy one:


You're Not Your Own Boss

Owners of a franchise location, on the other hand, do not have the luxury of being their own boss. Though you'll have some control over how the business runs, you'll be expected to follow the franchise's rules, regulations, system operations, and directions for the most part. If the company doesn't agree with you, it won't matter, and you won't have any remedy.


Requires More Capital

The costs of purchasing a franchise are high—in some situations, even higher than the expenditures of starting your own company. The franchise cost alone may be out of your price range, and even if it is, it may eat up a significant portion of your cash flow. Even if financing is an option, it is not a guarantee, which is a common concern among prospective franchisees.


Ongoing Royalty Payments

You'll still owe your franchise royalty payments for utilizing their brand and system, and you'll have to contribute to marketing and advertising costs at their discretion, in addition to the hefty costs of joining the franchise area.


Difficult to Manage Reputation

Franchisees benefit from the brand recognition of the company, but they're also susceptible if the public turns against that brand. Health concerns at another franchise location, business scandals, and other factors might make franchisees susceptible and jeopardize revenues.


Contactual Obligations

When you agree to acquire a franchise, you'll almost certainly sign a document called a Franchise Disclosure Agreement, which outlines your rights and responsibilities as a franchisee. If you fail to meet even one of those numerous standards, you risk losing your entire business. If you decide you no longer want to be in this industry, shutting up shop will be considerably more difficult than if you hadn't signed a contract with a national franchise.

 

Many of the same factors apply to buying into a franchise as they do to establishing any other business—you'll need a love for the industry, a business strategy, a team, organizational tools, finance, and more. But it's the details of what makes franchising a good or poor idea that makes your decision so fascinating. Before you acquire a franchise, consider whether you can live with the disadvantages while taking full use of the advantages.


Aliens Tattoo is actively looking for franchise partners. If you believe you have what it takes to run your own studio, let's get in touch!

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