The Value Of Buying A Franchise
Small business owners are struggling in the slowing economic crisis facing the world today. In order to curtail some of the expense of owning a business and paying for all the supplies and equipment alone, a small business owner should consider buying a franchise. This investment can keep the cost of owning a business down while still producing a product.
Buying a franchise is designed to provide a testing arena for successful business ownership.
Franchising combines business ownership with continuous training and advice. The success rate for this type of business structure is rapidly increasing. The franchise structure offers the small business owner the opportunity to own a business without the absorbent cost of investment as a sole proprietor. Franchises play a very important role in todays economy. Buying a franchise after researching a specific product can insure a good profit for the potential franchise.
ADVANTAGES OF BUYING A FRANCHISE
The franchisor achieves fast and closely monitored management of product distribution without incurring the expense of construction and operation. When the product creation and distribution costs can be kept to a minimum, the profit margin becomes bigger. This larger profit margin also frees more capital for production expansion and advertising. The franchisor also has the benefits of being a sole proprietor which is motivation to succeed.
The benefits for the franchisee which is also known as the business investor, gets the opportunity to start a business with minimum capital and is privy to the business expertise of those who own the franchise. The franchisee has access to business advice and equipment to further insure a successful franchise. Advertising costs, supplies and other miscellaneous expenses are minimal for the franchisee.
TOO GOOD TO BE TRUE
Even success can cause problems with franchises. There are some franchises that are so successful that the franchisor decides to provide direct competition to the original franchise. Good competition makes the services of each franchise more desirable to the consumer. The consumer gets the benefit of good quality service based on competition.
DISADVANTAGES OF BUYING A FRANCHISE
The major disadvantage to buying a franchise is that the actual franchisor, or the owner, has the most control of the franchise. The franchise contract can specify any and all details of the franchise contract but the bottom line is that the ownership still belongs to the franchisor. The franchisor can specify uniforms if necessary, the type of signs that the franchise will use and the type of advertising the franchise will implement. Because of the rise in the disputes between franchisors and franchisees, an organization called the National Franchise Mediation Program was established to coordinate arbitration and mediation between the two entities.
The ability to settle disagreements and continue to work together and provide a desirable consumer product or service is the ultimate goal of franchise ownership. Overall, franchises offer a valuable option for people interested in buying businesses because they offer a proven business plan.
Natasha Weller writes about small business from an entrepreneurs perspective. She has been doing freelance writing for 4 years, and in that time she’s covered topics as broad as how to do accounting to franchises for sale.