Are you thinking of opening a franchise and want to figure out if it’s a convenient choice? An analysis of Pro and Cons is what you need!
You are thinking of opening a franchise, but do not know the risks and the real potentialities? What are the pros and cons of this kind of entrepreneurial experience? Let’s find out about them together by analyzing in detail the characteristics of the so-called commercial affiliate.
Before explaining all the pros and cons of franchising, it should be pointed out that this collaboration formula, generally based on an agreement between the franchisor (producer or distributor) and the franchisee (usually an independent reseller), grants …
- The affiliate is able to market mother-of-home services products by using its trademark and benefiting from his or her technical assistance or advice on working methods, in return for payment of a percentage of turnover and / or admission fee;
- To the franchisee the opportunity to expand his business, developing it thanks to the opening of other stores for the newly managed members.
With this brief introduction, let us go to the actual pros and cons of opening up an affiliate business: why opt in favor of such a choice, which guarantees but above all what kind of risks it involves in the short and long lasting!
Pros of Franchise
- Good reputation
If you are a business known and appreciated by consumers, you are certain that you do not have to devote yourself first to building a good business reputation, because the brand that you associate is already well known.
- Simplified Assistance, Training and Management
Opening a franchise allows you to enter a well calibrated and working business structure where, in addition to receiving free support and ongoing training from your homeowner, you can also benefit from a management and control system simplified activity.
You may also like to read: How profitable is a franchise business?
- Reduced organizational and advertising costs
Affiliate to a solid company puts the independent reseller in the position to avoid a prior certain expenses related to advertising or the purchase of furniture, computers, etc.: a considerable amount of costs, generally borne by anyone wants to open up a business reality from scratch.
- Content Risks
Choosing to open the new sales outlet to a reality already tested by other entrepreneurs allows you to know in advance the difficulties you are facing during the journey and to avoid certain risks that can create more or less significant issues.
- Greater Opportunity to Access Credit
If you choose to open an affiliate business, you have greater opportunities than to make good deals with banking and financial institutions, even to get the funds you need to make the entire move.
Cons of Franchise
- Poor Independence
Any franchise activity requires the affiliate of specific rules to follow with the utmost rigor, which do not allow it to manage its own reality independently: despite the degree of independence resulting from the contractual arrangements, the parent company always imposes precise constraints to which to stand.
- Low level of responsiveness
Although the market requires some flexibility and willingness to change, before the franchisee can modify its strategy to embrace new management policies, it must wait for the approval of the franchise, accepting the time needed to transform its business.
- Strong standardization standardized
Systems such as franchising, on the one hand, simplify entrepreneurship, but on the other, they do not allow them to experiment with innovative ideas or projects and take any kind of initiative (campaign launches, promotions, discounts, etc.).
These are the main pros and cons of opening up a franchise: important factors to be considered with extreme caution before turning to head in a project that, though less risky than many others, still has considerable constraints.