Here’s the situation that aspiring franchise owners commonly find themselves in: they have adequate resources to use as capital, they want to stop being a paid employee, but they have zero entrepreneurial skills. And so they end up choosing to buy a franchise because it’s the perfect compromise…or is it?
What is a Franchise?
The term franchise is used to refer to a business that’s using the name, logo, and system of operation of a parent company in exchange of a franchise fee and a share of profits. Other rights beside the ones mentioned previously may be included depending on the agreement between the franchiser (the parent company selling franchise rights) and the franchisee (the buyer, which may be an individual or a company).
Pros and Cons of Owning a Franchise
Just like any other business, there are both benefits and drawbacks of owning a franchise, and whether you’ll have a positive future with a franchise or not depends on numerous factors.
PRO: A Franchise Allows You to Hit the Ground Running.
When you purchase a franchise, you need not suffer months or even a year of finding out for yourself who your target market is and what’s the best way to operate a business. Everything is handed to you on a silver platter.
CON: Franchise Fees are Usually High.
And in return for spoon-feeding you a whole new business, you’re usually asked to pay a hefty franchise fee and which may take you long years to recoup. Thus, if you have not enough money set aside, purchasing a franchise can be quite the burden.
PRO: A Franchise Has Lower Risks than a New Business
No matter how good your product is, there are more risks associated with opening a new business compared to owning a franchise. There is no basis to determine whether a new business will succeed or fail while the success of the parent company or its other franchisees can be used as basis for the success of a new franchise.
CON: A Franchise Has to Strictly Abide by the Rules of the Parent Company.
Even if you think you have great and innovative ideas to improve the performance of your franchised business, the most you can do is provide suggestions. As such, there are limited opportunities for you to explore and challenge your creativity.
Factors that Affect the Success of a Franchise
Type and Success of Business – Don’t choose to franchise just from any other company. Evaluate first the kind of success the company’s enjoying. Do you think your franchise can and will have the same fate? Do you think the business is just a passing interest for the public or does it show signs of longevity?
Skills and Other Qualifications – Some franchises require the franchisee to possess certain skills and abilities and maybe even an exceptional knowledge on a given field. If you don’t match the requirements specified by the franchisor, there’s a good chance that you wouldn’t be able to succeed in this endeavor.
Time and Management – If you’re not willing to spend sufficient time managing your business, you need to make sure that you put dependable and trustworthy people in the forefront. If you simply rely on anyone, how can you be sure that your business will continue running smoothly?
There are other factors that can affect the success of a franchise, but in the end, just make sure that it’s what you really want, need, and able to handle before signing on the dotted line.
Mario R. Churchill
http://www.articlesbase.com/business-articles/should-you-buy-a-franchise-or-not-112007.html
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Should I franchise or try to start my own small business?
I want to start my own pet supply store. I want to specialize in quality dog and cat food and toys and bedding, clothes..the whole 9 yards. Should I try to start it or franchise?
Do you have the capital reserves for a "franchise" – somebody elses’ retail box requirements & stocking and royalties? You’ll need about 75,000 to invest, and the franchise does the stocking and some of the advertising for you.
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Start it yourself unless you get very definite help from the people who sell the franchise.
The trouble with the franchise is that they might want your profits for a long time. That would stink. Also with a franchise you don’t have too much control of your advertising and hours and stuff like that. But perhaps you’d prefer that.
Both ideas sure have merit – good luck. Just read any contract really carefully and look for hidden charges that the franchise guys want to nail you with!
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Hi,
We are looking for some serious and committed people to partner with us and expand the business in Singapore.
Google and Microsoft are talking a lot about Video based advertisement on the internet, which is going to be the future. I have found a New business opportunity using which an ordinary person like us can Cash in on the technological breakthrough that is about to take the Internet by storm. Check it out here http://www.small-business.in
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As a franchise consultant, one of the most important questions any first-time potential business owner asks me is whether to start their own new venture or to look at franchising.
Starting up a new "mom and pop" type business is statistically very risky. Numerous studies have been conducted on this subject, and the general consensus indicates that 90-95% of new independents fail within two or three years. The steep learning curve that is involved can be a killer all by itself. The few who do succeed in this business model typically have an extremely high level of expertise in their product or service. They’ve "lived it" all their lives.
When it comes to franchising, however, much of the risk is reduced, or even eliminated. Although there are no guarantees, this business model is as close as you’ll come to a guarantee of success. The same studies show that new franchise business startups rarely fail. The reason for this, quite simply, is because the often very long exercise of trial and error has already been done so many times that it’s reached the inevitable point of trying and succeeding. The franchiser has made it through the learning curve and, along the way, has developed the success secrets for that business. Those who fail in franchising almost always were not committed to following the franchiser’s systems. The main reason you buy a franchise is to minimize risk and to set yourself up for success.
Traditionally, in a new startup, independent business, you are almost always operating from a "shoot from the hip" mentality, which can lead to failure. There is no past experience to draw upon, and it becomes challenging to control all aspects of the business.
With a good, successful franchise model, you open yourself up to a deluge of information regarding all aspects of information, including financial assistance, site selection, and a wealth of knowledge from existing franchisees. Also, rapid growth is inevitable with the franchise model, which is only a good thing for a franchisee for many reasons, such as increased name/brand recognition and exposure to national advertising campaigns, which increase sales. Tremendous buying power because of constant expansion is also a major plus.
Of course, the key is to follow the proven system of success, so your creativity can be somewhat lessened. In addition, you will have to pay a franchise fee and an ongoing royality, and your individual ability to make changes to the franchise is reduced dramatically.
To summarize, franchising greatly reduces risk, enables you to follow a proven, successful system, and increases your chances of success in business exponentially.
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Me. I’m a recruiter for the franchise industry with several years experience helping franchise seekers identify and attain their ideal franchise.
Start it your self. Make it a part of your advertising that your not a large company , franchise. No your a specialty pet store.
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I suggest starting up your own business. I feel you have much more flexibility when an entity is solely your own. With running your own business you have full control of what products you offer, the prices you set, the level of inventory on hand, hiring of employees, etc. This all comes with saying, you have the capital to create a business on your own. There are great websites and forums that are of resource to you online that will give you a step by step plan and offer guidance if you choose down the path of opening your own business.
I know, whether it be starting your own business, or going with a franchise, may still be of fresh consideration, I am currently helping a friend get his own small retail store up and running. We’ve been on the hunt for the equipment needed to keep track of inventory, products sold, all the point of purchase equipment and software and happened to come across this site, L-TronDirect.com He recently ordered a few hand-held barcode scanners and, as technical as the unit is, they were there to provide him with instruction and guidance on the function of the scanner and all its capabilities.
Like I said, the thought of your own business may be a mere thought right now, but if you do get it off the ground, you should check out the equipment on that site. The scanners, computers and software they offer are sure to get your business running smoothly and keeping everything organized and tracked.
http://www.l-trondirect.com/
Best of luck to you! Hope this helps!
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Franchise is more easy but need capital.
However, most of new marketers have only the slightest ideas on where to start, and a lot of them are not willing or able to invest a startup capital in their business. However, it is almost impossible to start an business without spending some money on basic infrastructure.
The very first option, if you have no money to start off your business, is to earn some capital using your already existing skills or knowledge. You can give tuition to students on your dominant subject in college, you can teach stuff about your hobby to people who are interested, you can write guides on knowledge or skills you picked up through experience and cannot be found in theoretical books.
The fastest, most effective and easiest way to build your own business empire is through joint ventures.
References :
Business For Newbies
http://www.tips-advice.ro/small-business-tips-advice/index.php