Advantages and disadvantages of buying a franchise There are advantages and disadvantages in buying a franchise rather than buying or starting an independent business. Some of these are listed here. Advantages: Note: not all franchise systems will include these factors listed below. association with a well established brand, reputation and product or service; assistance with site selection, lease negotiation, site development, builders and shop fitters; assistance with outlet design and equipment purchasing; initial management training and continuing management assistance; access to group/national market research, along with advertising and merchandising assistance; access to established standard procedures, operating manuals and stock control systems; assistance in securing finance and sometimes financial assistance in establishing the business; access to financing packages which may be more attractive and easier to access than for non franchised businesses; and access to established financial systems and checks which can provide early warning signals to highlight trouble spots. Disadvantages: less autonomy in some business decisions (franchisees generally have to operate the business according to the franchisors operations manual); restricted territory in which you may operate and/or promote your business; ongoing payment of fees to the franchisor; less control if you decide to sell your franchise business as there will be a set of procedures for you to follow, including getting the franchisors approval of the buyer; if you sell the business you will usually have to pay a fee to the franchisor as outlined in the franchise agreement; restraint of trade provisions on the sale or termination of the franchise that may be more onerous than required if a non franchised business is sold; at the end of the franchise term, the franchisor is not obliged to renew the franchise, in which case the business and its goodwill revert to the franchisor.
Posted on: Mon, 20 Oct 2014 01:41:14 +0000