Pros and cons of franchising your small business
Have you ever thought: “What if I turned my small business I run now, into a local or global franchise and if so, what would be the benefits in this for me”? Well, today we will give you a list of the different pros and cons of franchising your business, whether it’s globally through master franchising or expanding locally.
Pros of franchising your business
Freedom
Upon franchising your business, you’ll gain a lot more freedom for day to day events of running your own business. When you have a franchise, you’ll take on capable and like-minded people or teams who are called “franchisees”. Having purchased the rights to trade under your brand name and system of operations, as long as you give them the correct training as a franchisor you do not have to worry about that territory. You should thereafter know it’s in good hands so franchising is a great way of expanding without the stress.
Higher success rate
Many people know this already, but franchising has been proven to have a much higher success rate than independent businesses for the franchisee as well as the franchisor. The reason for this is if you have different people running different franchise territories that have had good training, all of that responsibility does not fall on top of you. Unlike when you are an independent business, you have to stay on top of all this responsibility by yourself. As a franchisee, the franchisor will have made mistakes so franchisees don’t have to. Franchisees will follow a proven system of operation that has been replicated across many franchisee territories.
Accessibility
Franchising is also great for people looking to run their own businesses for a small investment and so it’s a win-win for the franchisor. The franchisor will manage sales of their territories and the new franchisee who can now adventure into running their own business after receiving training. Territories are typically made up by postcode.
Now we have gone through the list of pros of franchising a business in the UK, we can now move forward to the cons of franchising your business. Hopefully, these cons do not put you off expanding your business but they are very important to know before entering the world of franchising – since with any business decision you need to know the in’s and out’s of what you are entering.
Cons of franchising your business
Economic decrease
As a franchised business you will make less money than an independent business with more territories and locations since an independent business does not get paid by a royalty percentage. This is because they own the entire company, but with franchising depending on the franchise agreement most have to pay a royalty which will mean less money coming into your business. However like said above, many independent businesses face the risks of having a lower success rate of franchising.
Costs can be high
As a franchisor, there are many things you need to pay for upon someone investing in one of your franchises such as materials, items and sometimes depending on what franchise you run high expense machinery. Typically the franchise investment will cover for this but this is also a downside to one interested in buying a franchise.
Spending time
Another disadvantage of franchising your business is you have a lot more time to spend on training your franchisees. This can be a huge disadvantage of running your own franchise since everyone knows that time is money so while you have to spend time giving your franchisees the proper guidance and training this takes time off you running your business. However, provided that you give the best possible training to anyone interested in joining your franchise, their success will be your success!
