Buying a franchise business can, for a lot of entrepreneurs, be the secret behind their success. Take McDonalds or Costa Coffee, a lot of their branches are franchises and due to the prestigious status of the brands, customers will inevitably flock in without much effort or marketing spend from the franchisee themselves.
However, there are of course, some disadvantages to franchising.
Wherever you are in your franchise journey, we thought we’d make it easier by working through the advantages and disadvantages of opening a franchise.
The first advantage to franchising is the flexibility it offers for the franchisee. Running your own business allows you to take greater control over your life. Unlike paid employment, you can decide what you want to do and when. This is the experience our franchisee in Northumberland has had. Liam Kane said:
“It has enabled me to drop my children off at nursery and pick them up every day. It means that on my wife’s time off, we can do something together, and I can play golf and spend time socially without having to ask for anyone’s permission.”
This is a huge benefit to owning a franchise, buying into an already established and well-known brand. The headquarters of the brand will do a lot of the work when it comes to brand awareness and therefore you will have high credibility markers right from the off. This isn’t to say you won’t have some work to establish yourself on a local level, but the brand will certainly help.
What is great about buying a franchise, rather than starting your own business, is that the business model has already been proven by successful franchisees of that brand. With a franchise, you can be pretty sure that the concept sticks with customers and entrepreneurs have made a strong, resilient business from it. All you must do is read some case studies or do your due diligence and speak to them personally.
Another advantage of franchising is the training and support you’ll get from the franchisor or head office function. At TAB, for example, our support is unparalleled. We support you all the way through your TAB journey, from launching, sales, and marketing to retention and exit. We even take care of our franchisee’s invoices and payments!
With franchising, there is never a moment where you are alone in your business, you always have experts and colleagues at the end of the phone.
A big plus for franchising, as well, is it can lead to an easier exit when you’re ready to move on or retire. You can work with your franchisor from the start about your long-term goals and ambitions and come to an agreement that satisfies both parties. Additionally, when you’re ready to sell, your franchisor may even support you in finding a buyer.
One disadvantage to buying a franchise is the big investment you’ll have to make. There’s the upfront fee as well as ongoing payments as per your contract. While this could be seen as a bad thing, remember that most of the time you’ll be investing in something that is proven and more likely to be successful compared to your own business venture.
Of course, there is the downside that with franchising, you may not be able to ‘go your own way’ with the brand. This depends on the franchise you buy, but all franchisors will have brand guidelines and acceptable approaches for how you can operate. This could lead to frustrations on your part if you want to take your business a certain direction that doesn’t fit with the brand. That’s why it’s imperative you check that the brand’s values align with your own.
Finally, another disadvantage to becoming a franchisee is the territory restrictions your contract may impose. It may not be the case with every franchisee, but many restrict your freedom when it comes to marketing your services or products in a particular location, as each franchisee has paid for the licence of the brand in that area. Therefore, to market outside of your territory can be a violation of your contract. So, if you want to run a business where you can scale up to various locations, a franchise might not be the best option, unless you’re willing to make the additional investment for a new territory.
....
We hope you’ve found that overview helpful when deciding about franchising. Of course, we would argue there are far more advantages to franchising than disadvantages, but that’s up to you.
Have you discovered the TAB Franchise? You could be part of something truly rewarding.