The Advantages and Disadvantages of a Franchise Business

Business owners just starting out and considering a franchise as the best way to invest their hard-earned dollars to start a business often wonder what the advantages and disadvantages of franchises businesses are.

Franchise businesses offer numerous advantages and a few disadvantages it is important for a business owner to learn about before diving into a franchise.

Advantage 1: Excellent Business Model

Pre-defined business models that are already proven to work are one major advantage to a franchise business.

Communities with a successful Burger Restaurant Franchise are a prime example of a franchise business model working for its owner.

Multiple locations of one business, such as a franchise, exist because the company behind the franchise has carefully developed a business model that can be transferred to many different types of ownership and many different parts of the nation.

Advantage 2: Not Developing from Scratch

Perspective business owners who want to start a business from scratch are often faced with the dilemma of exactly what to offer the buying public that no other business is already offering, and do it in a way that can be successful.

Franchises already do this. Prime examples are burger restaurant franchises that are scattered all over the country. Franchise types such as these offer the public something—food, experience, price, etc.—not offered by even other franchises in the same category.

Business models like this are shown to be popular and successful, making them a good investment for the start-up business person.

Advantage 3: Market Research is Done

Franchise businesses have typically already determined where their franchise locations will be successful. Years of market research and product development and studying demographics of particular towns and cities around the nation has already been done.

Perspective business owners who aren’t market-research gurus would have to spend thousands and thousands of dollars better spent on direct development of their business in order to conduct the type of market research national franchises conduct to determine where their model will work the best.

Imagine doing such research in to the type of business you are considering, and spending thousands and thousands of dollars on that research only to realize that the type of business you want to open already has too many competitors in the marketplace or simply will not work in the town where you wanted to open it.

Franchise businesses help perspective business owners avoid this needless waste of time and resources.

Disadvantage to Franchise Ownership

Franchise ownership offers far more advantages than disadvantages.

Lack of freedom of choice is the major disadvantage to franchise ownership. Franchises have such a tried-and-true business model that is proven to work time and again that they do not let individual owners deviate too much from their own plan.

Franchises will, to some degree, control everything from the color and shape of the building you are in to the exact product offerings you may serve. Perspective business owners who are inclined to be more individualistic and creative in their work may find that a franchise model is more strict than they like. Strictness in the franchise model, however, is a key to the model’s success.

Start-up capital is another disadvantage to franchise ownership. Depending on what franchise you wish to own, the capital can range from $10,000 (doable for most people) to $100,000.

Final Thoughts

Franchise ownership offers many advantages and a few disadvantages.

Perspective business owners who do their research in to the individual advantages and disadvantages of franchise ownership will find the specific advantages and disadvantages to the models they are considering.

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