Things To Think About When Acquiring A Franchise
Franchising can be a very successful way to enter the world of business
. You can be your own boss while working under someone else's business model in a company that has already become a success. You can often find franchises in fast food or retail chains. You pay a fee to buy the franchise and then you manage it as you see fit but you must follow the business model that has already been set out for you. For this reason you should consider the advantages and disadvantages surrounding this.There are a number of positives that come with purchasing a franchise. It is easier than starting your own business as it is already a success. A vast majority of start up businesses end up closing down within five years. Therefore the prospect of buying into an already successful business is very attractive. As the name is already well known you do not need to worry about publicity or about creating the right product as this has already been done for you.
Start up businesses inevitably have to allow for an amount of loss during the first year. This is due to experimenting to find out what works. This could be the prices or even the products. You also need to think about advertising with your own business which can be very expensive. When franchising this has all already been done for you so you just need to think about making money rather than spending it.
As well as your business already being an established brand name it is generally cheaper to buy a franchise than it is to start up a business from scratch. Banks also look favorably on them when it comes to lending money. There is less risk for them when the business is already proving to be successful.
However, despite all these advantages there are some disadvantages to consider as well. Although this can be seen as an easy way into the business world you still need to have some business or area related experience. The amount required varies depending on the company. The company wants to make sure that you will run the business in the way they want you to.
You also need to bear in mind that the initial fee is not the only one that you need to pay. If you wish to renew your contract when it expires then you may need to pay the same amount again. There is also no guarantee that you will be offered a renewal. It is at the company's discretion. You may also find that you need to pay a regular amount as an admin fee. These fees remain in place even if your business is not making a profit.
You will also have a lot less input into the business than you might hope for. You will be under contract to keep things a certain way. This may include the decor and layout of the premises and also the products that you are able to sell.
Considering all of this it is very important to take the time to make sure that this is both something that you want and something that you will be happy doing.
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