Why buy a franchise when you can get your own retail store, not pay monthly fees and can buy from any supplier that you want?
There are many reasons why people prefer franchises:
- comfort – if a person has never owned a business before, there is always someone there to guide them
- investors assume that all franchises are equal and all franchises make money. This is not true but this is many people’s perception
- training course is involved
- pricing is set therefore they do not have to determine the price by themselves
- suppliers are standard therefore you do not have to locate suppliers for the best pricing or quality
- location is determined by experts in the franchisor’s head office
- always someone there to answer questions and resolve problems
- can talk to other franchisees to see what problems that they may have encountered and how they have resolved those issues
- continual product development
- continually introduces new items
Disadvantages of buying a franchise
- not all franchises are equal
- some franchise locations are not profitable
- must do whatever head office wants including remodelling stores every so many years
- must buy all supplies through Head office which means that there are commissions going back to franchisor, does this result in higher costs for you?
- must pay a monthly royalty and advertising, advertising is aimed at entire franchise and is not specifically aimed for your location
There are many reasons why investors buy franchises, which franchise is the best one to buy – base it on if you are happy to be there everyday not just because your neighbour has that same franchise.