Pros And Cons Of Owning A Franchise

South Africa is without a doubt a land of opportunities as far as business is concerned. Support is given to those youth who want to venture into business. Running what type of business remains a personal choice. The franchising industry regularly likes to remind us that being a franchisee is a safe and potentially very profitable career. While this may be true, there are also downsides. We look at the best and worst aspects of being a franchisee:

Pros:

1. A Well Known Name Can Lead To Big Success: Working under a well-known brand name such as Nandos or KFC has obvious benefits for franchisees. There is increased security for your enterprise, not only are you following a tried and tested format, you can also benefit from the bigger bank balances of the larger corporations when it comes to funding for improvements.

2. Ongoing Help And Support: Once you take up your franchise, your franchiser won’t simply wave you goodbye and let you run their brand into the ground without a word of advice. As well as training programs and first-hand support, most franchisers help find and retain customers and assist with setting up accounting or stock control systems.

3. Defined Territory: Franchisers carefully choose the location of their outlets to gain the largest possible amount of custom and to avoid treading on each other’s toes. Also, unlike starting a business from scratch, many franchisers can afford prime trading premises.

4. Greater Access To Finance: If your franchiser is reluctant to part with vast amounts of cash for your start-up costs, there is no need to panic, banks will be happy to help you out. As a franchisee, you are looked upon more favorably when it comes to bank loans.

Cons:

1. Initial And Continuing Fees: Franchisers will charge new franchisees a lump sum to startup a business using their brand name. Many will insist that you purchase most of the materials you need from your own pocket, and some will demand that you have a certain amount of working capital before you are even considered to be a suitable candidate.

2. You Do Things Their Way, Not Yours: As mentioned before, each franchisee will gain training and guidelines on how the business should be run. Although this is a helpful leg-up into running your own firm, after your franchise is established you may feel your entrepreneurial creativity is somewhat restricted.

3. Other People’s Decisions Could Sink Your Franchise: The lack of actual control you have over your franchise means that even if you run a profitable outlet, you could still lose everything if your franchiser makes bad business decisions and the firm fails.

4. You Cannot Escape Hard Work: If you take on a franchise under the impression that the franchiser will do all of the hard work for you while you sit back and watch the money roll in, you will be in for a nasty shock. Working weeks of 60 hours or more are not unheard of among franchisees attempting to get their business off the ground.