To Franchise Or Not To Franchise?

On the surface, the idea of buying into a franchise makes sense. After all, the business is already structured, and you don’t have to worry about many major aspects of marketing. But is franchising the way to go? That depends. Today, we will take a quick look at the pros and cons of investing in a franchise business.

The Benefits

There are many benefits that go along with investing in a franchise. These include:



• Reduced risk. A franchise is essentially a proven business model. There are many franchises throughout the Nashville area, but these are often recognized, national brands. This means a lowered startup risk compared to launching from the ground up.
• Brand recognition. An established franchise likely already has a loyal customer base. This can make it easier to attract new customers, even in a new market.
• Support and training. As mentioned above, a franchise is a proven business model. This is not by accident, and franchises almost always come with training and support for new business owners. This takes much of the guesswork out of getting started.
• Potentially easier financing. If you’re planning to franchise with a much larger operation, you may have access to lenders who already have a relationship with the franchise. This could potentially make financing a bit less challenging.

The Disadvantages

While owning a franchise offers many perks, entrepreneurs will also benefit by understanding the potential drawbacks. These include:

• A higher initial investment. You can start your own business with zero dollars, if necessary. However, a franchise requires franchise fees and other assorted startup costs. And you may be required to have a proven net worth before being allowed to franchise.
• Less control. As a franchisee, you are bound by the rules and covenants of your franchise. You can’t make changes to the way you operate or to your marketing strategies, even if these are not working in your area.
• Long-term commitment. Many franchises will require that you sign a franchise agreement that lasts for multiple years. This can lock you into a contract that you’re required to fulfill.

There are many amazing franchises out there available for resale that make sense for future entrepreneurs looking to fast-track their way to business ownership. However, it’s not a decision to enter into lightly. Ask your First Choice Business Broker about existing franchises available and to discuss the pros and cons in more detail so that you can make an informed decision about your financial future.