The Pros and Cons of Franchising

As business owners, we’re pretty clued in when it comes to breaking into a market.

Starting from the ground up and opening your own business is rewarding, but it takes time. As an ambitious entrepreneur, you have other options to choose from. One possibility would be franchising.

If you’re unsure about what franchising is or the pros and cons of franchising, this article will give you some food for thought.

What is franchising?

If you buy into a franchise, you’re becoming part of a much larger conglomerate. A good example of this would be McDonald’s, with 93% of its restaurants run by franchisees.

For some, this could be an absolute turnoff. A lot of people go into business to create their own brand and run it as they see fit. But for others, it’s about being at the helm of their own site.

While this is just one argument for and against franchising, there are a number of other things to consider.

Pros of franchising

Buying into a franchise is a quick way to get on the business ladder, but it isn’t just about diving in as soon as possible.

Pre-established reputation

One of the hardest parts about starting a new business is getting the word out. You’ll have to pay for advertising campaigns, do extensive market research and rely on word of mouth. By buying into a franchise, you’ll be able to skip all of this as the company your franchisor will be recognisable and have its own reputation.

Business relationships

As you’ll be part of a larger chain of businesses, you’ll already have trusted suppliers to deal with. This saves time finding the best (and most affordable) people to work with.

Not only that, but customers will already know what your business. So you may already have brand loyalty on your side.

Security

One major element of becoming part of a franchise is the security it comes with.

As you’ll be part of a much larger network, you have more support should things go slightly awry. The franchisor will likely provide training, management of your accounts and further support to help you run another arm of their business.

Cons of franchising

Like any business structure, franchising does come with its downsides.

Less control

As we mentioned earlier in the article, buying into a franchise is a quick way to start up your business career, but it’ll mean making sacrifices. Those sacrifices are creativity and control.

Your franchise will operate almost identically to every other site under the umbrella. This means your processes will be the same, meaning you won’t have a say in how the business is run from the ground up. This can be frustrating for the more entrepreneurial of people. While you’re running your own business, it’s not actually yours.

Franchising costs

Even before you open the doors of your own franchise, you’ll have to pay the initial set-up cost. This is probably the most expensive part of your journey. According to Franchise UK, you can expect to pay anywhere between £300 to £250,000, and that’s only the start.

You’ll also have to pay franchise fees during your time which eats into your profits. You’re essentially paying to work under the brand name rather than paying it all to yourself.

Harder to leave

Once you’re in a franchise, it can be much harder to get out than if you were running your own business.

This is mainly due to buyers being wary of entering pre-existing deals and terms of the franchisor. You may also have a fixed-term contract which can stop you from leaving until your franchisor says so.

Liability

Although you’re essentially running someone else’s business, you’re still liable for any major catastrophes that may occur. Remember, it’s the franchise owner’s name above the door and their reputation on the line!

So what’s next?

Franchising can be a quick and easy way to dive straight into the business world. But is it right for you?

As business owners, we can give you sound advice on franchising and help you discover whether it’s the best option.

Get in touch to discuss becoming a franchisee.