Franchising: Correct career choice?
In today’s age, people are much more openly dissatisfied with their current career paths. They work for an employer who often demands a lot but underpays them, or simply they don’t enjoy the work they are doing. More and more people are open to the idea of starting their own business.
Although the notion of having complete control over your career sounds like a brilliant idea that brings an easy lifestyle and high amounts of income, starting alone from scratch can be very tricky if you’re missing resources or a business plan. For those kinds of situations, a franchise might be a perfect choice.
A franchise is a business model where one party (franchisor) has a business format that is run under the established brand, and another party (franchisee) is licensed and trained by the franchisor to run their own business for them, under the terms of the franchise agreement.
Like every other business model, a franchise model has its advantages and disadvantages. If a future business owner is thinking about switching careers and using franchising as their business model, here are some of the aspects they would want to look into before starting their career as a franchisee.
Pro: A franchise gives a lot of support from the start
When starting on their own, independent business owners might lack guidance and resources for their brands. The reason for that is the franchise network, in which big corporations have already established their business scheme.
A franchising brand will offer full training to the franchisees, including technical details about the business. They have a detailed plan on how to advertise and manage it, as well as recruit new employees and manage finances.
Another form of support comes through communicating with other franchisees in the business network. They can exchange knowledge and experience with other franchisees, either online or through business meetings, conferences or workshops. Other franchisees usually operate in other areas, so they do not represent competition to each other.
Pro: Franchising is a proven business model with lower risk
When starting on their terms, business owners face a lot of risks especially if they are not sure how to properly develop their brand. However, a franchisee has the benefit of not worrying about creating and managing everything by themselves. Therefore, the risk is much lower.
The investment a franchisee would have to provide depends on what business they will be working with. For example, the cost of a Burger King franchise location is considerably lower than for other franchises. This again depends on what type of building a franchisee can provide.
The only risk could be if the franchisor decided to completely close their business. This is generally unlikely since the franchisors are usually big corporations that have lasted for several decades, and who have a large market and many dedicated customers.
Pro: Both franchisor and franchisee benefit from the partnership
The franchisors don’t have time to supervise every employee in every shop or office their brand is operating in. This is why they benefit from working with a franchisee, who will manage the place while they focus on “important” things, like developing their business even further.
On the other hand, a franchisee has enough freedom to figure out how to manage day-to-day situations, like choosing their employees and creating a schedule that works for them.
Also, the recognition a franchise network has can help a franchisee get more people to come to their store. This eventually leads to more profit which an independent business owner might not have at the start of their business.
Con: There is no absolute freedom in being a franchisee
Even if franchisees are in charge of their office or shop, they cannot make any major decisions without consulting their franchisor first. Usually, these include working hours, pricing, décor, products, and advertising and marketing of the goods.
Besides limited creativity in business running, franchisee also lack financial privacy. A franchisee is obliged to provide a profit report to the franchisor which is often shared with other franchising offices or stores. Comparing profits with others could put a lot of pressure on a franchisee.
Con: There could be some disagreement between the franchisor and franchisee
When it comes to managing a business, there is always a possibility two parties might not see eye to eye. That’s why franchisees need to be very careful before they get involved with any bigger company since they have less power in this kind of agreement.
After disclosing the agreement, franchisors also don’t have complete control over everything regarding their business, so they should be careful when making any agreements with potential franchisees. They need to be clear about what is acceptable and what exactly they request from their partners.
These guidelines that a franchisor makes help franchisees understand where there is room for individuality, as well as what their obligations are from the start, so there is less chance for miscommunication.
