Summary Positives and Negatives of Owning a Franchise
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Course
Business Studies
Institution
10th Grade
Owning Your First Franchise
Think of your favorite fast-food restaurant — are there multiple locations? Is it even available in different countries?
If you answered yes to both, this is likely because it’s a franchise. There is an original business owner, but independent parties have bought...
Think of your favorite fast-food restaurant — are there multiple locations? Is it even
available in different countries?
If you answered yes to both, this is likely because it’s a franchise. There is an original
business owner, but independent parties have bought into the business and opened their
own locations. So rather than one person managing hundreds and maybe thousands of
sites, each store may have a different manager, but they all follow the same rules.
People choose to take part in this type of business model because they want to develop
business experience without the risk of starting a small business from scratch.
If you’re considering this option for yourself, it’s essential to be aware of the pros and cons
before deciding. In this post, we’ll lay out the advantages and disadvantages of owning your
first franchise that you can use to make your choice.
What are the advantages and disadvantages of franchising?
As a refresher, a franchise is a business where an independent party (a franchisee)
buys into an existing business venture from a franchisor and opens their own location.
Let’s discuss the pros and cons of making this decision.
Advantages of Franchising
1. Little to no industry experience is necessary.
While it’s essential to have business acumen, no specific industry experience is
required to purchase a franchise. You’re buying into an established business, and the
franchisor will provide you with industry-relevant training that will help you develop the
necessary skills to succeed at the job.
In the same vein, an additional advantage to purchasing a franchise is that it allows you
to explore a career in an industry that you’re curious about without committing to it with
your own business.
, 2. Existing customer base and brand awareness.
One reason people choose to purchase a franchise is that it comes along with an
existing customer base and brand awareness that is often tough to quickly develop for a
new, small business.
With a franchise, the target audience is already established and active, and since they
know what to expect, the decision to do business with you takes less time. As a result, it
also takes less time to begin generating profits.
Existing brand recognition also makes it easier for you to attract employees and talent.
3. Lower risk than starting an entirely new business
Purchasing a franchise comes with a lower risk than starting a new business, as the trial
and errors of new ventures have already been worked through. With a franchise, you’re
working with proven strategies and implementing a process that works.
4. Support from the franchise owner.
Franchisors provide support and training to franchisees to ensure you understand their
business model and how the stores operate. In addition, their years of experience will
help you build business acumen under their guidance, something not often available if
you start your own business.
5. Ample opportunities for expanding your business to different franchise
locations.
Another benefit to buying into a franchise is that you have ample opportunities for
growth and expansion within the same franchise.
If you’ve found success and enjoyed the process, you can open new locations while still
benefiting from the franchisor’s support. You’ll likely also have demand and brand
awareness in all the different locations you choose to expand to as well
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