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Is a franchise right for you?

On Behalf of | Jun 18, 2024 | Business Formation |

Starting your own business is a major decision for anybody – and one of the primary choices entrepreneurs face is whether to become a franchisee or build their enterprise from scratch.

Each option can be viable, but there’s no denying the allure of becoming a franchisee. When things go right, you basically have a successful business model at your fingertips and can build your knowledge and financial empire from there.

What are the benefits of becoming a franchisee?

The number one advantage that you get from opening a franchise is that you are “buying in” to a pre-existing brand that already has recognition. People already trust certain brands, and that can vastly reduce the amount of time it takes you to build your customer base and start turning a profit.

Plus, franchises have proven business models, which reduces the risk you’re taking. You can benefit from the franchisor’s experience and just follow their steps to success. In addition, the national or regional marketing campaigns managed by the franchisor can help drive traffic your way. While your fees help pay for those ads, you benefit through broader exposure than you could afford on your own.

Finally, it can be easier to secure funding for a franchise than your own start-up, because lenders associate lower risk with an established brand and successful business model.

What are some of the drawbacks of being a franchisee?

All of that being said, becoming a franchisee isn’t for everybody. Franchises offer limited opportunities for either creativity or autonomy, and that can be frustrating for someone who likes to express themselves in unique ways. Your reputation (and your business) can also be negatively affected by the actions of other franchises or the corporation itself.  Any bad publicity can hurt the entire network.

If you’re thinking of starting a business, franchise or not, it may help to learn more about the legalities involved and what it takes to protect your interests.

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