It would be hard to find many people who don’t use some kind of a franchise. Grabbing a meal at a fast food restaurant is pretty commonplace for many people. It is estimated that franchising is responsible for about 1/3 of all retail sales in the United States with a continuing increase in restaurants.
There is certainly an advantage to buying a franchise from an established company as once opened, it would be easy to establish a customer base. There are many other reasons while buying a franchise is a good way to buy a business, although it also has its downside.
Besides having brand name recognition, franchise owners can take advantage of parent company advertising. A nationwide commercial for Taco Bell is like a free advertisement for local Taco Bell owners. There also isn’t the uncertainty of how to go about opening a business as parent companies provide training, provide necessary supplies, (for a fee, of course,) and can offer their expertise to try to make the new franchise as successful as possible.
This type of business opportunity may have an expensive start off cost. In addition, many parent companies require ongoing royalties. Although owning a franchise allows a person to become a business owner, it doesn’t allow for the owner to truly work independently as the owner has to abide by the pricing and policies of the parent company.
Although some parent companies choose to offer franchisees discounts on products since the parent companies buy supplies in bulk, other parent companies will place mark ups on the products that franchise owners are required to purchase per their contract and thus make a big product margin at the sake of franchise owners.
New Business Advice
Before making any decisions, thoroughly research the company. Ask for disclosure statements and review the material carefully. If possible, try to talk to owners of other franchises to find out their experiences with the parent company along with checking to see what kind of profits are being made.
There are a lot of legal requirements at start up so be sure to work with an attorney. The Franchise Opportunities Handbook is available from the U. S. Government Printing Office. The International Franchise Association and the American Association of Franchisers and Dealers provide networking opportunities along with assistance.
Buying a franchise can be the perfect solution for someone who wants to own their own business. When considering this type of purchase, be sure to research everything and know the possible pitfalls. In addition, don’t forget to take advantage of the help that is out there for potential owners.