Planning on Buying a Franchise?

For many people franchising offers an attractive alternative to starting up a business from scratch. This is due to the fact that working with an established franchisor means that you will be working with an already recognised brand name and you will be able to benefit from a tried and tested market. In some ways you will be completely running your own business as each franchisee outlet is owned and operated by the franchisee. However, ultimately the franchisor will retain control over how the products and services are marketed and sold. Depending on your own personal interests, the world of franchising offers a wide variety of business opportunities for you to become a part of.

Franchising explained in more detail

Franchising is when the owner of the business (the Franchisor) grants a licence to another person or business (the Franchisee) to use their business idea. This will usually be for a fixed period of time, and will allow the franchisee to use the franchisor's name, product, service and association. In other words, as the franchisee you will be taking advantage of the franchisor's brand name, and their business strategy. You will be establishing a relationship with an already recognised name, and capitalizing on its profit. The franchisor will already have a proven system in place; and you will be taking advantage of it.

The advantages associated with Franchising

There are numerous advantages of buying a franchise. They include:

The level of risk associated with investing in the business is reduced substantially. If the other franchises have already been successful, you will be working with a proven idea, and should be making profit faster

Customers prefer to deal with well known brands rather than the 'unknown'. People enjoy the comfort and security an already established brand offers them. The more recognised the brand name is, the more you will benefit from it.

You will be likely to benefit from the training and support the franchisor will offer you. This will usually include support in setting up the business, instructions on telling you how to run the business, and on-going advice and support

The banks will be more likely to assist you financially, as they are generally more willing to lend money if you are operating a franchise with a good reputation

Whilst there are many positives associated with franchising, there are also some drawbacks. It is up to you to assess the weighting of each before you reach your final decision:

You will not have complete control in running the business. Therefore you will have to be content with following some rules and regulations, and be able to adhere to certain restrictions

The more well-known the franchise is, the more expensive it is likely to be. You will have to be prepared to dig deep into your pockets for this

Depending on how well the franchise is doing, there is an element of risk that it may go out of business

The level of support and training you will receive will vary from business to business. Not every type of franchise will offer the same amount. It will be up to you to investigate this further before you decide to operate the franchise.

Tal_Potishman

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