by, Claire on, May 29, 2017 Franchise.
A franchise is an established business model which is a tried and tested model already in operation. There are many different types of business franchisees and Avon, Anytime Fitness, Supercuts and Subway are just a few amongst many. There are Pro’s and con’s to setting up and taking over a franchise and it is very much dependent on what you are looking for when starting your own business.
A Franchise is an already tried and tested business model so you will be working within set rules and regulations that must be adhered to. This is largely because the business model works on these principles and has done for some time, staying consistent to these means success.
A franchise is often advertised as being a safe business option because you are following an already tried and tested business model as well as having access to funding and continuous support and advice. There are continuous mentoring services and training modules within the franchise that are regularly available to help you nurture and make a success of your chosen franchise. There is also access to funding for improvements on your business which wouldn’t normally be so readily available if you started an independent business.
A franchise will also have territory and boundaries meaning you will control a specific area and territory within your franchise that other franchisees are unable to operate in. This is one of the bigger attractions for franchisees and gives peace of mind to anyone starting out.
Any new business will require a substantial amount of starting capital and a franchise is no different, a new franchise will expect you to have an amount of starting capital and be able to prove you have that before they will consider you. There will also be royalty fees to pay usually on a monthly basis which is for the privilege of using the Franchise name. A franchise will operate for a set amount of time and when this franchise expires, there will be new fees required to extend the franchise. A Franchise will also require you to purchase most if not all of your material costs yourself and they won’t usually cover running costs and utility bills which you will be responsible for.
A franchisee has to follow the trading rules within that specific franchise and decisions and creativity may be limited when it comes to having your own ideas. This may suit and be ideal for some business owners who want the security of knowing what business model they can follow and staying within that, for others it can become frustrating as your creativity is limited. Many new ideas will always have to be commissioned and passed by the franchise and they have the right to say no and often do to new ideas. All franchise’s work on the principle that the business model stays the same within all of their franchise’s and if you try and stray away from that concept, it may be difficult for you.
Starting a new franchise will also be as much hard work as starting an independent business and many make the incorrect assumption that its easier. The business is still effectively yours but you are working within an already designed business model that can give you security.
Starting a franchise is very much an individual choice and you have to do your research and give it lots if thought before buying into one. It largely depends on your expectations and what you are looking for. If you are interested in a franchise, take a look at what’s on offer depending on what sector you are more interested in. Always do your research on what is expected of you financially initially and long term. Always consider the time scale of the franchise and extending that and whether you would enjoy the limited creativity and feel safe or it would be too restricting for you.