These are the pros and cons of buying a franchise, according to Lex Baker, franchise management and development director for Wall Street English
Buying a franchise can be a viable alternative to starting your own business, but it’s not for everybody. As a leading English language school franchise, Wall Street English is well placed to understand the importance of getting these decisions right.
For more than 40 years, our franchisees have been helping people to learn English through our blended learning process and right now, as you read this, thousands of people are getting to grips with the world’s most valuable language in more than 400 Wall Street English language learning centres across 28 territories.
Business in a box
Over that time, we’ve accumulated a depth and breadth of experience in franchise development that is unparalleled in our field.
As you can imagine, as the leading operator in our sector we’re constantly approached by potential franchisees attracted by our established reputation, fast return on investment, global presence, long history and ‘business in a box approach’ that makes opening a franchise such an easy proposition for the right people.
However, we recognise that franchise opportunities are not necessarily for everybody, so we thought we’d help you out with a handy and honest guide to the pros and cons of franchising.
When all is said and done, ultimately, running a WSE franchise is a partnership, so it’s vital that both sides are honest with each other up front to avoid any issues or misunderstandings further down the line.
And once you’ve weighed up the pros and cons, if you still think it’s the right route we’d love to hear from you.
Here are the top six reasons why we think buying a franchise is a great idea:
- Independence and confidence. Franchises are unique in that they combine the independence of small business ownership with the confidence and benefits that come from being part of an established and credible support network.
- Bespoke training. You don’t necessarily need relevant industry experience to run a franchise. Franchisors usually provide all the training you need to operate their business model.
- High success rate. Franchises often have a higher rate of success than traditional start-up businesses, so the evidence is on your side.
- Financing opportunities. Not everybody has the money up front to start a business. In fact, often it costs less to buy an established franchise than to start a similar business from scratch. You may also find it easier to secure finance for a franchise.
- Reputational support. Franchises often have an established reputation, proven management and work practices, access to national advertising and ongoing support.
- Lower risk entrepreneurship. You enjoy the advantages of business ownership without the risk of going it alone and with an established model.
Not all a bed of roses
However, investing in a franchise partnership is a huge decision and it’s not for everyone. So in the spirit of honesty, here is some honest advice around making that decision that shows it’s not all a bed of roses:
- Limited room for manoeuvre. Franchise agreements dictate how you run the business, so there will be less room for individual expression or creativity. Make sure you know the limits of your agreement before signing.
- Defined scope and scale. You’re likely to have restrictions on where you operate, the products you sell and, sometimes, the suppliers you use, so it’s vital this is all clear.
- Reputational control. Even if your franchise is doing a great job, you can’t control the performances of other franchisees, which may affect your franchise’s reputation. So take a look at the franchise network and identify any reputational risks before making your decision.
- Profit sharing. Buying a franchise means ongoing profit sharing with the franchisor, so it’s vital to have an honest discussion about what that means in real terms for your business.
- Limited term contracts. Once signed, there’s no guarantee the agreement will be renewed at the end of the franchise term, so work hard to achieve all your deliverables in the first term if you want the partnership to remain strong into the future.
Eyes wide open
So there you have it. The pros and cons of investing in a franchise, laid bare for you to review and enjoy.
When all is said and done, unsurprisingly, we passionately believe in the franchise approach. It has worked well for us and for millions of people around the world for many years.
But for a franchise to succeed, it’s vital both parties enter into any agreement with their eyes wide open, which is why we take the selection process so seriously. Buying a franchise can be a life changing experience, so make sure it’s a positive one. Do your due diligence before signing a franchise agreement.
A properly designed and executed franchise system can be an exceptional method of expansion, but franchise systems that are poorly designed or not well managed are to be avoided.
While many entrepreneurs have the skills to run an existing successful business, they may not all have the expertise it takes to get a business up and running, whether that’s obtaining financing, negotiating lease terms, identifying market opportunities, building the right team, or penetrating the marketplace with a new offering. Buying an existing franchise in a well designed system can eliminate much of that risk.
At Wall Street English, we can provide help choosing the right territory and professional support in all work streams, including daily operations, finding the best location, recruitment and training, building marketing strategies and launch planning.
Remember, when you buy a franchise you buy a complete system - everything should be in place to get you off to a flying start. This should help you to eliminate much of the guesswork and help you avoid some of the most common and obvious mistakes.
Operating a franchise requires a certain kind of person: ambitious, entrepreneurial, financially astute and aware of the greater good.
So if you think you have the right stuff and you think Wall Street English might be the right partner for you, we’d love to talk. We’ll be honest and upfront about all the pros and cons. Who knows? You might even end up owning a chain of language schools.