Eliminate your fears and doubts about franchising: 10 franchise advantages

Are you thinking about getting involved in the world of franchising? We’ve got 10 franchise advantages that you must know about here.

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Are you thinking about owning a franchise business?

If so, are you aware of the franchise advantages and disadvantages?

There’s quite a lot to consider, even when you’re buying into a successfully established market. If you’re serious about becoming a franchisee, then keep reading —there’s a lot to learn!

What it means to own a franchise

Owning a franchise is the alternative to starting your own business. When you buy into a franchise, you’re buying into an existing business model, usually with an already proven track record of success. That includes certain provisions, such as an efficient training program, an established supply chain, and the relative support to the business.

Taking part in the franchise world means that you pay a fee — barring other costs — to run a piece of a trademarked business. There’s a low-risk, high-reward concept behind becoming a franchisee, whereas starting your own business from the ground up is always a high-risk scenario. Starting your own business can be followed by a high reward, a low reward, or possible failure — which is what makes the idea of taking part in franchise ownership so appealing.

It’s important to remember that when you buy into a franchise, there are certain rules and regulations you must follow. Despite being the owner of your particular establishment, there’s not much room for creative licensing. So, if you’re thinking about becoming a franchisee, it’s important to weigh the pros and cons of owning a franchise.   

Franchise advantages

Arguably, the advantages of owning a franchise are far greater than the disadvantages. That doesn’t necessarily mean this type of business venture is right for everyone. However, the advantages are something to think about, especially if you’re on the fence.

Let’s take a closer look at the franchise advantages:

There’s a higher success rate

As we’ve mentioned, when you buy into a franchise, you’re buying into an established and trademarked concept. Most franchises have the backing of a larger corporation that has a tried and true business model. This makes them a more secure investment for you.

Additionally, because franchises usually come with a proven successful track record, getting a franchise business loan will be much easier than getting an independent business loan. Starting your own business from scratch is risky since there’s no history. You’ll have to put in the work to make a name for your brand and build your reputation, which can take a long time.

You’ll receive business assistance

When you own a franchise, you own what is known as a turnkey business. That means you’ll benefit from the parent company of your franchise by receiving certain benefits throughout the life of your business.

You’ll be supplied with the proper equipment, instructions, and supplies needed to get started. In some cases, you’ll also receive management aid, ongoing training, and marketing support. For example, the parent company of your franchise will typically take care of the business’s marketing campaign, which means you won’t have to worry about allocating the funds for ongoing marketing efforts.

You’ll also likely receive assistance for pre-opening necessities such as construction, site selection, design, and grand-opening efforts. 

You’ll have more buying power

Another advantage is the buying power you’ll have as a franchise owner. The parent company of your franchise will pass down their savings to each of their stores, as well as their relationship with suppliers. That means your inventory and materials will cost far less compared to what you would spend if you owned an independent business.

You’ll have a built-in customer base

Buying into an established franchise means you can hit the ground running because there’s already a strong customer base. If the business is a franchise, chances are there’s strong brand recognition at least nationally. You won’t have to do much in the way of enticing people to give your business a chance because there will already be existing customers waiting for your doors to open.

You’ll generate immediate profits

The franchise industry in the UK has turned over £15bn, according to recent statistics. With a built-in loyal customer base, you won’t have to worry too much about poor profit margins. You’ll likely be able to generate a higher return on investment (ROI) despite having potentially higher franchise costs.

Franchise disadvantages

While there’s a huge upside to buying into a franchise, especially when it comes to the high ROI, it has its downsides as well. The disadvantages of owning a franchise are often overlooked, yet crucial to consider.

Here’s a closer look at the pitfalls of franchise ownership:

There are strict rules to follow

Becoming a franchise owner isn’t the same as opening your own, independently-run business. When you agree to buy into a franchise, you’re agreeing to adhere to the rules and regulations set by the franchisor. You’ll come to find that in most cases, the franchisor will remain “in charge,” and exert their control over you and your business.

Depending on the agreement you have with your franchisor, they may be the ones making the big decisions in terms of store location, hours of operation, store layout, signage, furniture style and placement, product supply, and resale conditions. Most of the time, this is meant to keep all stores looking uniform throughout. Of course, this can be very limiting if you’re the creative type. 

You’ll be responsible for ongoing costs

You may already understand that when you own a franchise, you have to pay a franchise fee. What you probably didn’t know was that you’ll also have to pay a certain percentage of royalties to your franchisor each month. That money comes out of your business’s revenue stream, and it’s typically used to disperse among all the franchises for supplies and other universal costs.

You may also be charged other fees by your franchisor to cover the costs of marketing and anything else they deem necessary. You’ll want to pay close attention to your terms and conditions where fees are involved before signing off on a contract.

Ongoing support may waiver

Franchisors have the discretion of deciding how much assistance to provide you from startup and throughout the life of your business. They’re not universally obligated to provide continuous assistance, and may only agree to a certain extent. For example, they may only agree to provide assistance during the pre-opening phase.

Others may promise additional or ongoing support, but if it’s not designated in the contract, it’s possible that you’ll never get that ongoing support. Once again, this is something that can be avoided by reading the contract thoroughly before signing. 

You’ll need to have the investment capital

Buying into a franchise is expensive. After all, it will technically be your business. Therefore, you’re responsible for coming up with the initial investment capital.

If you don’t have the investment capital, you’ll need to make the proper arrangements beforehand.

There are some inherent risks

Just because it’s a franchise doesn’t mean it’s guaranteed to bring you success. You may buy into a well-performing operation, however, it may not bring in the revenue you desire — or require. You must investigate your potential new business carefully before buying into it, especially if it’s a smaller franchise. 

Other things to consider

Among the advantages and disadvantages of owning a franchise, there are a handful of things that fall in-between the two. Depending on how you look at it, the other things you need to consider may benefit you or work against you.

Here are some other things to consider with franchise ownership:

The marketing and advertising clause

Once again, the parent company, i.e., the franchisor may try to stipulate that all franchises under them must pay a fee for marketing and advertising. The most important thing here is understanding the terms and conditions of your contract so there are no financial surprises.

Be sure that you agree with your franchisor’s marketing and advertising clause if there is one.

How to calculate franchise fees

 

Your contract isn’t permanent

One essential thing to consider is the fact that your contract will have an expiration date. Once you’ve reached that expiration date, only the franchisor has the power to renew your contract. That means you can potentially lose your business if they decided to jump ship.

On the other hand, you also have a choice in the matter. If your franchisor offers you the opportunity to renew, but you’re unhappy with the business, you can safely walk away. 

It’s a team effort

Remember, when you take part in a franchise, you’re taking part in an entire brand. That means there’s a collective effort between the franchisor, you, and the other franchise owners under that brand name.

This collective effort can be a very supportive community that helps each other, or it can go in the opposite direction. As a franchise owner, you will share in the success of this community. You will also share in their failures and missteps, which can hurt your reputation even if it wasn’t your particular store at fault. 

Ready to own a franchise?

If the franchise advantages appeal to you much more than the disadvantages, then owning a franchise may be the right move for you. Owning a franchise can be very rewarding, as long as you do your research and invest properly.

Read more: Best UK Franchises

We can help you find the perfect franchise that’s worth your time and money. Contact us today to see how we can help you capitalise on your future business venture.