Advantages and Disadvantages of Franchising

When looking at all of the advantages of franchising, it is easy to see why so many people get involved in one. However, at the same time, there are some potential disadvantages that you should know about. Here are some of the advantages and disadvantages of franchising.

Support

One of the biggest benefits of getting involved with this type of business model is that you will have plenty of support. When you get involved with a franchise, you know that the parent company will be involved in your success. They do not want to see one of their branches fail. For individuals that do not have a lot of experience in business, this might be the best business model to pursue. 

Proven System

Another benefit of using a franchise is that you are buying into a system that has been proven to work. When you set up a new business, you really have no assurance of its success. If you purchase a franchise, you know that someone has already made this exact business model successful. You are basically just opening up another location in another market. This takes a lot of the guesswork out and makes it a much safer investment.

Buying Power

When you get involved with a franchise, you will automatically have buying power. This means that your supplies and inventory will be less expensive than if you were to buy them on your own. Many franchises have buying groups and deals that can save you significant amounts of money. As a new business, you need to be able to save any way that you can.

Costs

One of the biggest advantages of getting involved with a franchise is that you will have extra costs. In order to get involved with a franchise, you will have to make a large initial investment. You will also have to make regular franchise payments to the company in most cases. These payments can quickly add up and cost you a significant portion of your profit.

Rules and Regulations

In order to ensure that every franchise is exactly the same, the franchise will impose rules and regulations. You will have to follow these rules or risk punishment from the company. This limits the amount of freedom that you have and can be discouraging at times. If you simply started your own business, you could run it however you wanted.

Choosing the Wrong Franchise

In the past, you could choose almost any franchise and be successful. In today's market, there are so many franchises out there that you could easily choose the wrong one for your market. Some franchises do not work in certain areas and if you choose the wrong one, it could be devastating financially. You have to do your homework when choosing the proper type of franchise. 

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