Buying a franchise makes you your own boss.
To franchise or not to franchise is what most aspiring entrepreneurs ask themselves. The challenge of starting from scratch can be tempting to some, especially since they can mold the business exactly how they want it to be. On the other hand, choosing the franchise may have advantages and disadvantages, but how should one base his decisions?
I have these questions to help you on your quest for the type of business you want to put up?
- Do you have the necessary skills or knowledge to put up a business?
- Do you have enough financial resources to start with?
- How much are you dedicated to this endeavor?
- Do you have the right location where you plan to put up your business?
- Would you want to take more risk in building your own brand, or would you like to start with an existing brand?
- What excites you more – concocting your own business concept. Or starting with a known brand where all you have to do is continue what has already been started?
Let’s say that you opt to buy a franchise instead of starting your own business, and that would seem to be the trend these days. This is because there are a lot of franchise businesses that have become truly successful. And to start a business from scratch may seem to be wasting a lot of time (as some of the other entrepreneurs might think). So, if you want to start franchising a business, then ANCHORS AWAY! But, before you take out your money and begin paying the franchisor, take a peek at the pros and cons of starting a franchising business.
Franchising a business has both its risks and rewards.
The Pros and Cons of Buying a Franchise Business
Just like anything in this world, there are advantages and disadvantages. Therefore, you must weigh them first before you dive into your plans.
Pros:
- Since a franchised business has been operating for quite some time, it means that the business model has been tested. And have already been proven to be effective. And because of their proven success, an aspiring franchisee may get a loan easier since the bank already knows it is a safer investment than starting a new business.
- This also means less trouble getting the word across all channels because the brand will speak for itself. Of course, being an aspiring franchise owner, you need to ensure that you only deal with the right kind of business. And not fall prey on practically any type of business offered to the franchise.
- It is easier to purchase everything you need for your franchise business because you only have to deal with one person, the franchisor. Since you have a franchise business, there is uniformity in everything; therefore, the products you sell need to be precisely what the franchisor is selling. This lessens the burden of you talking to different suppliers.
- Franchisees get all the support they need -from site selection, design, construction, financing, training, and grand-opening programs.
Time is in your hands, but you must also use it wisely. Therefore, you can create a flexible schedule for yourself. You can divide your time working at home and having some hours at the site. • This allows you to be your own boss. You won’t feel alone managing your business because your franchisor would just be a phone call away. Thus, you are in business for yourself, but not by yourself.
Cons:
- Expect to spend a lot of money when starting a franchise business. Be vigilant in checking what comprises the total amount you are paying for. This does cover the franchising fee and the construction of the location. Also, some franchises may ask for a monthly royalty fee, so, better choose the kind of franchise you can really afford.
- It is written in the franchise agreement that all your financial information must be shared with the franchisor. The franchisor uses the information to improve the business model and audit royalty payments. Thus, there is just a little privacy left for franchisees.
- Your creativity may not be helpful since the franchises already have a predetermined brand. Franchisees are expected to follow everything the franchisor says, including the design, color, products, and services. Going against this would be a breach of contract.
Owning Multiple Franchise Businesses
Let’s say you have started one franchise business and decided to put up another one. Is it a more significant risk? Of course, there is always a risk. However, when you are keen on choosing the kind of business you want to deal with, the risks may be lower. Owning multiple franchises can significantly increase the number of obstacles to go through; thus, franchisees should always have their eyes widely opened.
First and foremost, you must be sure that you are ready to take up the challenge of owning more than one franchise business. Even if you think you have adapted yourself to the business, there is no guarantee that you will succeed in your next franchise business. If you fall short in seeing the possible obstacles.
I know one entrepreneur who started one franchise business and then opened another one after 6 months. Apparently, the first branch was a huge success, and she was able to get her ROI immediately. So, it didn’t stop her from starting a new one. Another hit after a few months, and she was on her third branch. She thought it would be successful again because the brand had gotten more prominent over the years. Still, the location made her forfeit the franchise for that particular branch.
If you plan to start a multiple franchise business, here is a short checklist to help you.
- Enough resources (finances, manpower)
- Strategic location
- YOUR TIME
Some business owners just have their eyes sparkle whenever they think that they have so many businesses. However, they overlook the most critical factor: their time to manage/handle their business well. Indeed, store managers can be hired to help the business owner check the everyday operations. Still, some individuals might just take advantage of the business owner’s absence. This is why I would suggest that if you can’t be physically present to check your businesses regularly, you might as well just stick to one or two. You may be able to manage your time in looking over your businesses.
It is great to have a lot of businesses simultaneously, ONLY IF you have really trusted people who can work with you. Your presence is vital because you can check on the performance of each of your employees. To check the quality of products and services if it still goes with the brand, and to see to it that the business, especially for food stall franchisors, that the area is well-maintained and sanitized.
Therefore, owning multiple franchises becomes a balancing act between risk and reward. Those franchisees capable of getting it right are in prime positions to keep growing and expanding their reach. I salute those franchisees who can stay grounded and continue to succeed with their business.
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You may contact Armando “Butz” Bartolome for questions and more information.
By email: aob@gmb.ph
FB Page: Armando Bartolome
Linkedin: https://www.linkedin.com/in/franguru/
Website: https://www.gmb.ph
