Wednesday, October 29, 2014

To Franchise or Not?

So you want to start a business; but you are unsure of where to begin. What are your options? Should you purchase an existing business, start from scratch, or buy a franchise? Franchising as an option provides a lot of benefits.

Nicole Fallon of Business News Daily wrote an article today where she discusses trends and some of the benefits of  franchising. She mentions that franchises help one avoid unnecessary risk and they are more easily expandable in international markets. Also as an added incentive, franchises are perfect opportunities for inter-generational family businesses especially between the millennial and the boomer.

While this is true, you have to consider whether or not franchising is suitable for YOU.

Franchising: Passion or Risk?

Do you want less risk or do you want to follow your passion? For me personally passion is more important. It is what keeps me going when I feel like giving up.  If you invest in franchise and it is a concept that you are passionate about then you have the best of both worlds. But if you do it just for the money and to avoid risk it may become more of a burden in the long run, especially if it isn't profitable at the onset. During these strenuous times, passion keeps us going.

Franchising:  Rule of Law or Freedom?

Do you want the rule of law according to the franchisor or do you want freedom?  I recently looked at Kumon as a possible franchise. I found that their stipulations require that the primary investor work in the franchise. As a business owner, I want freedom. Though I love working in my businesses, I don't want this decision mandated. There may come a time that I want to hire out my position and I want the freedom to choose either option.

Franchising: Share Profits?

Do you want to share your profits?  Most, if not all, franchises have an upfront franchise fee that must be paid to purchase the investment in addition to an ongoing royalty fee that continuously cuts into your profit margin on an ongoing basis. This may be a great option  for some but for me it is a bitter pill to swallow. But then again, if your are making a lot of money, you may not be so concerned about the fee.

Franchises are an option for anyone who wants to get into business but it is not the only option. If this is what you are considering tell me why you think it is the best option for you by commenting below.

If you want to read Nicole's original article you can find it here.

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