{"id":754,"date":"2015-11-10T14:07:50","date_gmt":"2015-11-10T22:07:50","guid":{"rendered":"http:\/\/www.checkworks.com\/blog\/?p=754"},"modified":"2015-11-10T14:17:45","modified_gmt":"2015-11-10T22:17:45","slug":"the-pros-and-cons-of-buying-a-franchise","status":"publish","type":"post","link":"https:\/\/blog.checkworks.com\/index.php\/the-pros-and-cons-of-buying-a-franchise\/","title":{"rendered":"The Pros and Cons of Buying a Franchise"},"content":{"rendered":"

\"SAMARA<\/a><\/p>\n

 <\/p>\n

By Jurissa Ayala<\/p>\n

Buying a franchise is one of the best ways to start and run a successful business. The most visible examples of thriving franchises are in the fast food industry (Burger King, KFC, etc.), but there are numerous strong franchise businesses in almost every other market space, from plumbing to child care to management consulting. The initial investment varies as well, from tens of thousands of dollars for some personal services businesses to millions for national restaurant and hotel brands. While each franchise is a unique opportunity, before you buy a franchise consider these general pros and cons.<\/p>\n

<\/p>\n

Some of the pros include:<\/p>\n

Established Brand Identity:<\/strong> Many franchises have built a strong, positive brand identity among their prospective customers. In many cases, the public isn\u2019t even aware that franchisees are an important part of the brand\u2019s go-to-market strategy. Some good examples of this are GNC Live Well, Choice Hotels, ServPro<\/span>, Midas, H&R Block, and Merry Maids. Your chances of success are significantly increased if the franchise you buy has wide brand awareness.<\/p>\n

A Proven Business Model: <\/strong>A good franchise provides a proven business model. One example of a unique, successful business model: Snap-on Tools. Its franchisees sell high-end tools from mobile stores. To check up on how well a particular franchise works, talk to existing owners about their own experiences.<\/p>\n

Operational Support: <\/strong>Strong franchises provide their investors with training, procedures, software, approved suppliers and even building plans. Creating this yourself could take years. When looking at more than one franchise opportunity, compare the level of support each franchisor provides its franchisees.<\/p>\n

Future Products and Promotion: <\/strong>The best franchisors<\/span> have a long term plan for new products and promotion that will drive franchisee growth.\u00a0 Look closely at franchisors<\/span> with a track record of new product introductions and innovative marketing.<\/p>\n

What are some of the downsides of purchasing a franchise?<\/p>\n

High Initial Cost:<\/strong> You get what you pay for, and franchisors<\/span> place a high value on the brands they\u2019ve developed and the support package that they provide. You\u2019ll may also have to invest in equipment and related start-up expenses. Make sure you understand all of the costs, and talk to other franchisees to get their take on the start-up process.<\/p>\n

Ongoing Royalty Payments:<\/strong> Once you\u2019re underway, part of your cost of business is ongoing royalty and advertising payments back to the franchisor. These come off the top, and depending on the franchise can range from near zero to over 10% of gross sales. Royalties and fees help your franchisor support your brand and provide operations support, and you\u2019ll need to judge if they\u2019re a good deal for you.<\/p>\n

Limited Control: <\/strong>Owning a franchise means giving up control normally accorded a business owner. Your advertisements may have to follow strict guidelines, you won\u2019t be able to sell non-approved products, your selling area may be limited and you may not be able to use non-approved suppliers. Get comfortable with the franchisor\u2019s rules before making a buy decision.<\/p>\n

Long Term Viability:<\/strong> A franchise brand that was a fantastic investment five years ago may not be such a great business today. One of the biggest challenges faced by franchisors<\/span> is keeping their brand fresh and their business model and support up to date. (All<\/u> franchises must address this. A case in point is McDonalds\u2019 recent struggles to tailor its menu to shifting tastes.) The best franchises are the ones with demonstrated staying power.<\/p>\n

 <\/p>\n

Due diligence is the foundation of every good investment decision. If you\u2019re looking at a franchise opportunity, kick the tires.\u00a0 Visit multiple franchisee locations. Talk to owners. Look at the support package they\u2019re receiving. Review the franchise\u2019s history of new product introductions and improved business and advertising support. Check out the competition. (Visit the competition!) You\u2019ll learn a lot, and in the process make the right decision.<\/p>\n","protected":false},"excerpt":{"rendered":"

  By Jurissa Ayala Buying a franchise is one of the best ways to start and run a successful business. The most visible examples of thriving franchises are in the fast food industry (Burger King, KFC, etc.), but there are numerous strong franchise businesses in almost every other market space, from plumbing to child care […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/posts\/754"}],"collection":[{"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/comments?post=754"}],"version-history":[{"count":1,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/posts\/754\/revisions"}],"predecessor-version":[{"id":756,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/posts\/754\/revisions\/756"}],"wp:attachment":[{"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/media?parent=754"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/categories?post=754"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.checkworks.com\/index.php\/wp-json\/wp\/v2\/tags?post=754"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}