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Pros and Cons of Starting a Franchise in This Economy

Written on May 26th, 2008 by Joseph in Franchise Industry.

Everyone is wary of the economy nowadays; oil price are rising world-wide and the growing cost of living is making people think before spending their money. Hence, it’s natural to be apprehensive while investing in even safe options like starting a franchise. So, to help you decide, here are some pros and cons of opening a franchise in the current economy.

The Pros
• It’s much safer than stand alone business, as the success rate of franchise business is almost 90%!
• In this field, an experienced franchisor guides the novices. So, the new business owners seldom make such mistakes that can ruin them.
• Most importantly, franchising has a proven business model, which is taught to the franchisees when they buy a franchise.
• The franchisor made mistakes in the past and learned from them. In the initial training, the franchisees are taught in such a way that makes them expert business owners within a short period of time.
• The brand-name of the franchisor makes sure that the franchisees have good business from day one.
• ROI is faster and easier when you buy a franchise.
• You get loans easily with the franchise concept’s name working as collateral. Also, top franchises either have third-party financial options or offer loan terms themselves.
• The training and the support system makes even people, with no idea of the particular line of business (but with general business skills), experts within a few months.
• The franchisees can choose from over 2,900 franchise opportunities one concept that suits them in every way.

The Cons

• You don’t have the authority to decide many things about the business. For example, there might be guidelines regarding how the walls should be colored and where you can source your napkins from!
• Many franchisors have such high royalty fees that after paying that, the franchisee has little profit in hand.
• The franchisor may place certain restrictions on the franchisee even after he or she has left the business!

You can see that the pros far outweight the negatives. Consider joining this booming field today.