Moghul Law PLLC
Email Us Or Call Us Today: 571-732-0764

Should you open a franchise business?

One sure path to business ownership for many entrepreneurs is to open a franchise. This can wind up being a very lucrative move, but it is not without certain drawbacks.

How can you know if purchasing a franchise is a good option for you? Listing the pros and cons of franchise ownership is a good place to start.

Pros of operating a franchise

If you're on the fence about opening your own franchise business, these benefits might sway you in favor of it.

1. You'll have an established base of customers and a branded product ready to go.

One of the hardest things for entrepreneurs to do is to get their product off the ground. Here, you will already have loyal customers eager to purchase your product or services.

2. Built-in support network for your business.

This alone can be worth its weight in gold if problems develop. You can also benefit greatly from national marketing campaigns.

3. Established supply chains at your disposal.

With reputable suppliers on hand to send you branding and marketing materials, as well as the products themselves, you will not need to negotiate with local suppliers that might prove unreliable.

4. Training is provided.

You will receive technical training as well as managerial support from most successful franchises. This can help you get off to a good start and help you stay on track for success.

5. Lowered risk of business failure.

While being a franchise owner does not guarantee success, their already proven track record does give you an edge over risky start-ups that can go nowhere fast.

All that might sound really good and have you champing at the bit to get started acquiring the rights to open and operate your own franchise. But, before you get too excited, let's also examine the cons of franchise ownership.

Cons of operating a franchise

Balance your enthusiasm for franchise ownership with these negatives.

1. Start-up costs can run to six figures.

You will have to either have the resources to buy into a franchise or be able to access a generous line of credit, as some of the most popular franchises are quite expensive.

2. You kick up royalties monthly.

With your own business, once you pay off any loans, all profits are yours to claim. With a franchise, you will always owe a percentage of your monthly gross to the franchisor.

3. You have virtually no creative control.

Buying into an already successful brand means that you will always toe the line set by the brand. You may eventually feel that your creativity is stifled by the rigid rules and regulations imposed by the franchisor.

4. Susceptible to damage from branding crisis.

The brand itself could suffer negative publicity that has nothing to do with your franchise. Yet, you still could suffer the repercussions from a national branding crisis that affects your bottom line.

5. You're locked into a long-term contract.

Your personal circumstances may change and you may one day want to extricate yourself from your franchise operation. However, the terms of your contract may make that very difficult.

Regardless of your eventual decision, you may want to seek the counsel of a Virginia business law attorney before obligating yourself to franchise ownership.

No Comments

Leave a comment
Comment Information
Get Started Today
Moghul Law PLLC

Moghul Law PLLC 3871 Plaza Drive Fairfax, VA 22030 Phone: 571-295-4026 Fax: 866-451-9531 Map & Directions