Pros

Proven business plan – One of the biggest positives is that respected, well-known companies that offer franchises have a proven process and operating system that has been replicated many times in different geographic locations and with many franchisees. That’s the key to franchising.

The importance of this is hard to overstate. The five-year failure rate for most non-franchised businesses runs 50-70%, depending on the industry. Franchising increases your odds considerably.

Support – As business partners, franchises want their franchisees to succeed. The company’s reputation and profits are at stake. Even more, their business model is built upon showing franchisees the best way to run a business in that industry. They usually have dedicated support people for all phases of the business.

Brand recognition – This allows your business to get a running start. When a potential customer sees a name they know and trust they are much more willing to do business with you. Although brand recognition is higher with some franchises than others it means faster growth and faster profitability.

Cons

Royalty payments – Franchisors typically make money by being paid a portion of the money that comes into the business, whether from sales or profits. Successful business partnerships almost always work this way. And, it makes financing a business much easier for you. Plus, it means franchisors and franchisees are on the same page, as partners should be.

Lack of complete autonomy – With a proven method of running successful businesses come rules. Franchisees must stick to that plan. That’s because it works. Other ideas that a franchisee might have usually have been tested and found not to be as effective. For people who crave autonomy this can be a significant issue.

Restrictions on geographic territory may limit growth – Franchisors normally set limits on how large a territory you have. If you would like to add another location, you must get permission from them. Some allow it and others do only under certain circumstances. Bottom line – they are in the driver’s seat when it comes to expansion.

Perspective:

All business opportunities have pros and cons, as do nearly all life decisions. The key is how important they are for you. A franchise consultant has the knowledge and experience to walk you through that and decide which opportunities best fit you.