Have you always dreamt of being your own boss? For many, starting their own business is a complicated and big decision and for that reason a lot of people find themselves more in favor of opening a franchise instead.
While there is a lot of freedom and independence in owning a franchise, being a franchise owner is not the same as being a business owner. There are distinct benefits to going the franchise route, but it is important that you understand these differences and the franchise’s expectations prior to starting your own business.
Here are a few of the basics that you must know before investing in one of the many franchises available.
- You do not own the brand – The brand you invest in will be one that many consider a household name. This can be very beneficial, especially in the beginning, because it takes less advertising and marketing to educate your local market in what it is you are offering. However, if there is ever a scandal or anything happens to tarnish the brand, your business will also be affected even if your location had nothing to do with the occurrence.
- You will be using a preset organizational strategy – Franchises are perfect for business owners who know that they want to manage their own business but are not sure where to start. With a franchise, you will have guidance from the very beginning with preset guidelines on how to run your business and how it must operate. As a business owner, you are left to fend for yourself and determine what works best through trial and error.
- You will have ongoing support – Entrepreneurs often times join local networking groups as a way to find support and help for their business. But by owning a franchise, you have a network of people that you can reach out to for support specific to the industry and niche that you are in. This can be very beneficial, particularly to people who are new to the franchise industry, as it can give specific help for a brand instead of just overall business advice that may work well for one company but not for your own.
- You will not have full rights to all income – As a franchisor, you will be required to continually pay out fees based on the income you bring in. This is different than many people realize. Instead of being able to keep and reinvest your revenues as you see fit, you will be required to pay back certain royalties or fees to the corporate office and follow their guidelines on how to use your revenues. This can be helpful for people new to business but for others with a strong entrepreneurial spirit, this can also be detrimental.
- You must adhere to legal standards – This is true for both entrepreneurship and franchise ownership but the way in which you must adhere to legal standards differs depending on how you start your business. Contact the franchise opportunity to learn more about their legal requirements in your state.
There are distinct differences between entrepreneurship and becoming involved in franchises. Consider these factors to know which is right for you.