Is Franchising a Better Way to Own a Business? Find Out Here

Having your own business paves the way for financial freedom and flexibility. Building a business from scratch takes effort, time, energy, and risk. To save yourself from the risks and downfall, franchising companies provide training. These companies also help expand the already running businesses.

The real question is if franchising is a better way to own a business? At the end of this article, you will be able to make a decision and answer this question.

1. Why Do You Want to Buy a Franchise?

If you want to buy a franchise for a business, you will have to decide why you want it in the first place. People usually franchise if they are looking to replace a full-time income, leave a full-time job, or are looking to build real wealth by owning a franchise to expand their business. So, it’s important to determine why you want a franchise before taking further steps. 

2. Money

The average franchise costs about $250,000 to get up and running. If you are looking to open something like a Taco Bell, McDonald’s, KFC, or even Burger King, you will be on the higher end. At the lower end, you have franchises that are cheap and cost as low as $12000. Franchises can range from $10, 000 to millions of dollars to open, and that should scare you because people have lost a lot of money investing in the wrong type of franchises to open a business. So, be careful when investing in a franchise, as this will later determine how much income you are generating from your business.

3. Think About Buying an Existing Vs. New Location

This is important to consider because if you opt for an existing location that already has sales and customers, and is already generating a profit, then the likelihood of success is higher. This is because the business is already set up and running, and you will only be paying for the business based on the profit. This type of business is usually preferable as it puts a lower risk and a better position to succeed. So, when you are going to start a business, ask a franchise company if they have any existing locations available. They will not volunteer this information because they are more interested in new locations.

Investing in a new franchise location has its own risks. This is because you are starting from scratch without any customers, staff, or profit. The benefit of a new site is that you may find a great place with low or no competition.

So, weigh all the pros and cons before buying an existing or new location. This is a crucial step for the expansion of your business.

4. What Are Your Skill Sets?

It is the most important aspect when determining if franchising is a better way to own a business. The process starts by selecting the skill sets needed and asking the right questions, whether it involves due diligence, the research, or the location that you picked. If you don’t have a history of making good decisions, then franchising may not be the best way for you to own a business because it all comes down to you in the end.

Among all these investments, you also need to check yourself and learn to trust your gut to ensure you can do it. While analyzing yourself, the essential thing is to look at your skill set. Check if your skill set aligns with the franchise opportunity.

5. Can You Follow the Rules

Another way to determine if franchising is a good option for owning a business is to check if you can follow the system. If you don’t like to do as told, and you prefer to be in a leadership role, then owning a franchise isn’t for you, since this is all about following an already planned-out system.

It doesn't mean that you can’t be creative and think out of the box. You own your own business through a franchise, so you will be required to use your skills for smooth operations.

One way of dealing with this problem is to ask your franchise company beforehand about how flexible you can be, and how welcoming they are to ideas and innovation. 

You should be committed to whatever you are doing. It’s always important to think about the exit strategy in case you don’t make it. Things can go wrong, or changes could happen in your life where you either want to sell or get rid of the business. So before you decide on owning a business through the franchise, think about the outcome first. It will help you make your decisions.

If you can adhere to the above-mentioned points, then franchising is a better way to own a business. It’s your preference, but we have narrowed down the whole process to help you reach your decision by weighing all the possible pros and cons.

Happy franchising!