Pros and Cons of Franchising

If you’re an ambitious, hoping-to-be entrepreneur, and the thought of starting your own business is a bit daunting, one option to consider could be franchising.

Pros

• Operating under an already established brand could lead to success as they already have an established business model, loyal customers, and market trust.

• You will immediately have advice, support and guidance from the franchisor and not have to worry about start-up costs and branding.

• Securing financial support, such as loans, is easier. Investors are more likely to look upon franchises more favourably as they have a proven business model.

• Relationships with suppliers, distributors, sales and marketing teams already exist so it is easier to hit the ground running.

Cons

• Business owners who choose to franchise, have much less control over how the business is run. This could make them feel their creativity and independence are stifled.

• You will have to give up some of your profits to ‘pay’ for the privilege of operating as a franchise.

• You will be tied to the established franchise supply network, which could possibly eat into profit if those suppliers are not the most cost-effective.

• Relying on the success of the franchisor and other franchisees to ensure the brand is successful could possibly prove problematic if bad decisions are made.