Advantages Disadvantages Of Franchising. What Are They?
Advantages disadvantages of franchising make up a for and against list. Personally I think that you are very brave if you take a franchise on. But if you do, then I wish you all the luck in the world and I hope you make a massive success of it. There are cheaper alternatives out there though.
So What Are Some Of Disadvantages Of Franchising?
1. START UP FEE
If you have been researching franchises you will have seen some of the start up fees and costs. They can range from $10,000 upwards and this can rise to a couple of million dollars or more, depending on the franchise. The average cost of a franchise in the US is between $20,000 and $30,000. So it will be interesting to see how someone could come up with that amount of money in this current economic climate.
2. ONGOING ROYALTIES Normally the franchise company will take a percentage of the profits and this will vary between companies, making a franchise less attractive to the investor. Beware of signing a contract that ties you in to royalty fees ongoing.
3. ONGOING COSTS The franchise company will also dictate to you where you can buy all of your supplies. If you do not comply with this edict you face the prospect of having your franchise taken away from you in a see of red tape and litigation. Buying all of your supplies from the same company limits your choices and means less profit for you. They will aslo dictate the advertising that takes place and this could be good or it could be bad, depending on the contract that you have signed and the amount they say you must pay for advertising.
Advantages Disadvantages Of Franchising
4. STRINGENT RULES This basically restricts the way that you carry out your business and stifles any creativity that you may have. In other words it is our way or no way. Again red tape and the possiiblity of litigation is always on the cards.
5. PROFIT MARGINS The more up front or starting costs you pay the longer it will take to make a decent profit. In some cases it may take 4 or 5 years to turn a excellent net profit and there will always be a ceiling on how much you can earn. You must really do your due diligence and research on any particular company or franchise that interests you.
6. TIME When you sign a contract you will be expected to stay the term, which means they control how long you are running that franchise. With a franchise you never really have total control.
So What Are Some Of The Advantages Of Franchising?
A. A SYSTEM
You have the advantage of being part of a proven business system, something that works. This is vital moving forward in the business world.
B. BRAND NAME You get the chance to join a national or global business organization with powerful clout. You will fall under the umbrella of the known brand name so the risk are much fewer than with a conventional bricks and mortar business. Hopefully the franchise company have ironed out all of the difficulties when you join them. You will benefit from quality, consistency, consumer trust, dependability and a proven product.
C. SUPPORT Franchise companies normally give excellent support and training. So these are two very important areas that can be milestones around your neck normally in business. I am not an expert when it comes to franchises or franchising but I personally know people who either bitterly regretted or were disappointed having taken a franchise out.
Most of the regrets related to the suppression of creativity, restriction of large profits and limited control of their respective business. So is there an alternative to franchising? I believe that network marketing is a more viable proposition and I will explain why.
The costs to start a network marketing business are minimal in relation to a franchise. The franchise alternative I am involved in has initial costs of between $400 and $3000, but these amounts are not a requirement, only suggestions.
You have a the advantage of a proven business system, ongoing support (free) and training (free). You have a proprietary product(s) that are in demand and at a price which is acceptable to the current financial climate.
You chose the ongoing costs dependent on your personal budget. Those costs normally involve advertising and lead generation. The great thing is that you do not have to give up your day job to join the home business industry I hope that whatever you decide to take part in, it is the right choice for you my friend.
To Your Success
Advantages Disadvantages Of Franchising
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