12-13-2014, 03:41 AM
Franchise Benefits
Franchise Problems
- Known costs. When starting your own business, costs can unexpectedly exceed expectations, Keefe explains. With a franchise, you know exactly what costs are going to be.
- Guidance on location.
- Guidance on purchasing, and on the quantity and types of goods used.
- Established relationships with reliable suppliers. And, you'll likely have better pricing, thanks to the franchise's stronger purchasing power.
- Some franchises provide training and problem-solving assistance. They can help in goal setting and other business-related issues.
- An already established brand, resulting in a built-in customer base. Some franchises will also provide leads and other sales-related support, like call centers.
- The assurance that all legal issues have been addressed.
Franchise Problems
- Some folks aren't temperamentally well suited for franchising. If you're extremely entrepreneurial or creative, you'll likely chafe at the restrictions posed by all but the most hands-off franchise (and even these rarities may prove too restrictive).
- Typically, you'll have no control over the goods you use and the cost of these goods.
- There may be restrictions on what other kinds of businesses you can become involved in or operate, as well as limitations on employment in related fields.
- If you're a trade/craft-oriented franchise, such as plumbing or painting, you may have little say over the jobs you can take or turn down.
- Possibly higher marketing costs that could have slight value to you at the local level. For example, a Super Bowl ad: You may think it doesn't improve your sales but you may have to pay your share for its cost anyway, says Keefe.
- Spillover. Bad press created by another franchisee can negatively impact your business.