Franchise setup to some people may seem an easy business. All that is needed is to take forward an already established brand forward but in another location. But little would you know that there is more than just that. One has to spend considerable amount of time and invest money to ensure that the business starts to pay off. Here is a glance of the pros and cons of starting a franchise:
- Building a brand and clientele – Starting a franchise business means that your brand is already an established one. Your customers will expect that the delivery quality is guaranteed. Their familiarity ensures that your business setup is a reliable brand. You don’t have to worry to ensure the continuity of existing clientele and you will be able to build the new one basis the brand name.
- Control – Owning a franchise means that you have the freedom to choose the people you hire and the culture you develop in the operating environment.
- Business strategy and product development – As a franchise owner, you need not worry about your business strategy or product development. The franchisor will develop these strategies and replicate them to each of the franchise. In fact as the owner, you are likely to know the trade secrets of your parent company. You will also save time and money in developing any new product. The franchisor will create the product and you will only have to implement it.
- Research – Initial research and spending a lot of time is needed to be done by the franchise to ensure that the choice of business is absolutely correct.
- Tenure – A franchise contract typically may last for 10 years or may change depending upon the franchisor.
- Initial cost – Royalty fee which ranges between 6%-20% per year along with set up cost and rental needs to be born by the franchise.
- Operating System – While a franchise gives you the freedom to choose the employees you can hire and fire, you still need to follow the operating system of the larger business. The equipment and uniforms become a part of these guidelines and adherence to these is a must.
- Stakes – If anything goes wrong with the franchisor (ethical or any other concern), this bad mouthing is likely to impact other franchisees as well. A good name attracts perks but negative publicity also causes the franchisee store to bear the brunt.
Franchising is the top operating model these days which gives both the franchisor and the franchisee many options to explore and create an entrepreneur environment and franchise one helps making a sound decision. It has various modules which have been very helpful to many people in the past specifically the one pertaining to education franchise Singapore.