5.26.2021

The Pros and Cons of Owning a Franchise

Written by Austin Chegini

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Pros and cons of owning a franchise

Are you looking to start your own business? If so, you already know it is no easy undertaking. From startup fees and legal requirements to hiring and marketing, you will have to take on many tasks for your business to succeed. 

If you’re like many other entrepreneurs, you will likely face this decision: Start an independent business or invest in a franchise. 

While buying into a franchise may seem like an easy way to open your own business, you need to keep a few things in mind. Let’s review some of the pros and cons of owning a franchise to help evaluate this option. 

The Pros of Owning a Franchise

Pre-built business model

The excellent part of owning a franchise is accessing an existing business model. Whether you open a restaurant, service business, or store, the franchisor will provide you with everything you need to get started. With this kind of consistency, it is easy for you to train staff and open your doors without worrying about unknown risks. 

Compare this to owning an independent business like a coffee shop. If you forget to train staff on certain procedures or fail to acquire the right tools for the job, you could jeopardize the success of your business. 

Marketing made easy

Unless you are opening the first franchise location, the business likely has proven marketing strategies. Even if you are the first, the franchisor is responsible for providing you with marketing materials to grow the business. From flyers to window displays, you are entitled to a mountain of advertising tools as part of your franchise fee. 

While you will still need to think of specific marketing strategies for your area, the franchisor does much of the heavy lifting. 

Initial training and ongoing assistance

Both you and the franchisor want your business to succeed. It is in everyone’s best interest to ensure staff understand their roles and that any questions are answered quickly. 

For this reason, the franchisor will provide you with the initial training needed to learn the fundamentals of the business. For many franchise owners, this includes a trip to the cooperate office to learn more about the company and hear from seasoned veterans. After this, corporate trainers will help your staff learn the ropes and sometimes guide them through your grand opening. 

Afterward, you will receive updated training on new policies and initiatives from time to time. Likewise, the company will have resources for you to get help for unexpected problems. 

Instant brand recognition

When you buy into a franchise, people instantly recognize your name and will know what type of service they can expect. Before you even open your doors, people will be talking excitedly about your grand opening. Just look at the crowds of people who flocked to this Chick-Fil-A on opening day.

This kind of immediate connection does not occur when you start an independent business. You will need to work much harder to increase brand awareness in your area.

The Cons of Owning a Franchise

You are not the decision-maker

As part of your franchise agreement, you are bound to follow certain guidelines set by the franchisor. While these terms are designed to ensure business success, they ultimately restrict what you can do with the business. For example, you may not be able to create certain advertising campaigns or adjust your menu to experiment with new items. 

So, just as franchise gives you everything you need to succeed, they also prevent from deviating from the set path the franchisor establishes.

Startup costs and franchise fees

When opening your own business, it may only cost you a few thousand dollars to get up and running. If you’re opening a franchise location, be prepared to spend much more. 

The initial cost of buying into a franchise can range anywhere from $10,000 to over $2 million. These fees accomplish a few things, including weeding out unprepared owners and covering all the startup costs associated with the business. 

Furthermore, you will continue to pay the franchise a variety of fees over time. These fees could be fixed items to cover things like marketing as well as royalties on all your sales. 

Risk to your reputation

No matter how well you run your business, all it takes is one other franchise to ruin your reputation. If another location is found at fault for spreading a foodborne illness or fails a health inspection, consumers will be hesitant to dine with you. Likewise, if the corporate owner faces criminal or civil actions, your business could be forced to close. 

While these examples are not typical at all, they illustrate the lack of control that comes with owning a franchise.

Start a successful business with Epos Now

Whether you choose to buy into a franchise or start your own business, you will need the right equipment to get the job done. And when it comes to retail and hospitality, few things are more important than your point of sale system. 

With the right POS, you can:

  • Manage inventory effectively
  • Process transactions quickly
  • Access a large app store
  • Login remotely anytime, anywhere

Epos Now provides all types of businesses with POS solutions tailored to their needs. From handheld devices to touchscreen terminals, we have a variety of tools to help you do business better. 

Contact Epos Now today to schedule your demo.

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