CEO of Frannexus, award-winning franchise consultant and author of “Profits are Better Than Wages.”
Recently, the International Franchise Association released its outlook report for the future of franchising—and things are looking up! According to the study, job growth is steady and will likely continue as we find our new normal following the pandemic. Franchises are slated to add over a quarter of a million employment opportunities and an additional 15,000 new individually owned businesses this year alone.
What does this mean for those looking to franchise? Now might be the perfect time to take the leap and become a business owner.
The Advantages Of Owning A Franchise Business
Today many people are not finding the return to a poor work-life balance to be an acceptable way to find happiness in their lives, and they’re considering taking the plunge to become their own boss. Franchises offer an opportunity for many to realize their dreams while also providing a safety net of a winning strategy and playbook to victory.
1. Lower Risk
Franchises typically have less risk than other new business ventures. When you buy a franchise, you can feel confident that you have a proven playbook for making things work. New business concepts and ventures might come with a product or service that meets the needs of the community, or it may not—there is just no way to know.
When you buy a franchise, you don’t have to go it alone or figure out what to do from the ground up. Many franchises offer all the hand-holding you need, from territory location to building and construction.
2. Affordability And Lending Security
Building a new business from scratch will involve borrowing money unless you are independently wealthy with liquid cash and assets. In our uncertain times, many traditional lenders are unwilling to take a chance on new businesses without a proven track record. And with interest rates on the rise, borrowing has become riskier than before and requires you to make more to make it into the black. Lenders often see franchises differently and may be more likely to secure loans for proven successful businesses than for new and original ideas.
3. Purchasing Power
Franchises can offer bulk-buying power for owners to save on products and lower their operating costs. An individually owned startup might be able to buy in bulk, but I’ve found that does not usually equal the bulk supplier discounts that you get when you purchase a franchise.
4. Absentee Ownership
Many franchise opportunities provide what is called “absentee ownership.” In essence, this means that you can be completely removed from the daily practices of the business. If you choose wisely, you can continue to work at your given career and float your family and finances without hardship while the franchise earns money.
5. Potential For Change
Often, as adults, we go down a path and realize far too late that there is no turning back, and we’re just stuck. If you buy a franchise, you can do something that makes you feel fulfilled, even if you have no expertise or training. Franchises could allow you to begin a new path and do what you love.
The Challenges Of Franchise Ownership
Although franchises come with a lot of advantages, there are also drawbacks to consider. Whenever entering into a contract, you should go in with your eyes wide open.
1. Rigidity And Little Room For Individuality
When you buy a franchise, there is not much room for creativity or individuality. For entrepreneurs, this can often feel stifling and rigid. Following an exact playbook might be easy, but it can take players who desire control from the playing field and make them feel benched.
2. Royalty Fees For Life
There will never be a point where you will be able to call all of the profits yours. Royalty fees will exist for the entirety of your ownership and business venture.
3. Networking Limitations
As a franchise owner, you are often beholden to buy products only from approved vendors. That can limit your ability to compare shop or find the highest quality products that will reflect directly on your business and bottom line. In today’s uncertain times, finding ways to save money is a must, but a franchise can limit your ability to cut costs in various ways.
Is A Franchise The Right Move For You?
As we head into a post-pandemic recovery, things are uncertain, if nothing else. The only certainty many of us have is that we are finally beginning to feel social, human and connected once more. Just because we can return to business as usual does not mean we necessarily want to. If you are tired of the daily grind and want more out of life, then being your own boss may be your ticket to freedom—professionally and personally.
Whether you want to switch gears and find more satisfaction in your daily life, are looking to control your wealth accumulation better, or are looking for multiple streams of income, owning your own business is something to consider.
Before you enter into anything, however, it is critical to consider all avenues, their advantages and disadvantages, and find what is a good fit for you personally. For some, that might mean a new business startup or pursuing a franchise opportunity—either way, go into it with your eyes wide open and gather all the information you need to get started.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here