For individuals considering a career change that involves franchising, there is a lot to consider. For one, it is important to weigh the advantages and disadvantages of franchising to decide whether it is the right move for you. To help you understand the nuances of franchising, you must first understand what is not a disadvantage of a franchise business.
The International Franchise Professionals Group (IFPG) is a network of over 1300 franchisors, franchise consultants and vendor members who strive to guide aspiring entrepreneurs through the process of joining a franchise business. Our mission is rooted in integrity, ethics, and collaboration and our goal is to provide you with comprehensive information about franchising. Read on to learn more about frequently asked questions of franchising and what is not a disadvantage of a franchise business.
What Is A Franchise Business?
A franchise business is essentially a business model where the franchisor licenses the rights to operate a business based on their established trademark, business system, name, and logo. The franchisee receives a complete marketing plan to launch their business, ongoing training and support in operations, and marketing efforts. The franchisee also receives the trademark and logo, which help to build instant brand recognition and customer loyalty.
What Are the Advantages of Franchising?
There are numerous advantages to operating a franchise business. For instance, a franchise business offers an established market presence with existing customer loyalty and brand recognition. This is highly beneficial to the franchisee as it requires less investment in marketing and brand awareness.
In addition, a franchise business offers operational support, training and guidance throughout the process, so the franchisee has access to resources to help them better manage their business. Franchise businesses are also popular with investors since the franchisor supplies the business system and name, reducing the franchisee’s risk of starting a business from scratch.
What Are the Disadvantages of Franchising?
Though the advantages of franchising are great, there are also a few disadvantages that every potential franchisee should consider. The most common disadvantages associated with franchising are high costs of fees, lack of control and autonomy, and restrictions that come with the franchisor’s system.
Franchise businesses require franchisees to pay fees in order to operate the business. These fees are quite expensive and can range anywhere from $10,000 to $100,000 depending on the size and scope of the franchise. In addition, franchisees may have to pay ongoing fees to the franchisor which can further add to their costs.
Franchisees also have to follow the franchisor’s system, which means they have less control over how the business is operated. This lack of control can be difficult for those franchisees who are accustomed to having complete autonomy over their business operations.
Finally, franchisors may impose specific restrictions on their franchisees which can limit their ability to make decisions or take certain actions. For instance, if the franchisor dictates that all franchisees must use specific suppliers or purchase specific products, the franchisee has limited flexibility in making decisions.
Which is Not A Disadvantage of a Franchise Business?
The one disadvantage that is not associated with franchise businesses is location. For instance, franchisors are not allowed to dictate the exact location of the franchisee’s business without the franchisees consent. Likewise, if a franchisee decides to move their business to a new location, they are able to do this without any restrictions from the franchisor. This means that franchisees retain ultimate control over the location of their business and can move to where they feel will best suit their business needs.
Franchising offers a variety of advantages that make it an appealing option for individuals who are considering a career change. Despite the advantages of franchising, there are some disadvantages such as expensive fees, lack of control over operations, and restrictions from the franchisor. The key is to understand what is not a disadvantage of a franchise business – location – so that franchisees retain complete control over where their business is located.