Online Franchising Pros & Cons
March 16, 2023Many aspiring entrepreneurs turn to franchising to jumpstart their careers in the business world. An industry newbie can benefit from the well-established market, reputation, and business model of an existing franchise. With training and support from the company, a franchiser can use this opportunity as a launch pad from which to grow the business even further.
As the world of e-commerce continues to expand, online franchising has become more popular than ever. While similar, there are stark differences between traditional franchising and online franchising that you need to consider before moving forward with an internet business venture.
What is Online Franchising?
Online franchising a franchise business that you can operate entirely online. Instead of investing in physical business locations and staff, you operate a digital storefront that greatly reduces overhead costs and other pitfalls that can create issues for other businesses.
*Some franchisers consider partial online franchises where most operations are conducted online but production and shipment are done on location. This is largely for entrepreneurs that are looking for a normal franchise, but want to use their online presence to build a larger consumer base.
Advantages of Online Franchising
Low Cost
The most obvious benefit to a web-based franchise is low overhead costs. With a normal franchise opportunity, you are expected to invest in commercial space, in addition to paying for building maintenance, staff recruitment, payroll, and much more. With online franchising, most of these costs become irrelevant to your enterprise. All you need is to buy a domain name and website. This allows you to devote more of your budget to areas like marketing, advertising, and web development.
(Insider Tip: Online franchising is an attractive prospect for young franchisers who are just getting started.)
No Holds Barred
Online franchises avoid many of the restrictions that plague other franchise opportunities. Unlike your classic brick and mortar company, an online business is open for business 24/7 reaching customers worldwide. You are not limited by your locality or hours of operation. Instead of paying someone to sit behind a cash register all night, the internet can bring in revenue for you.
Efficiency, Guaranteed
When you run an online franchise, you can move quickly. Instead of slowly rebranding or changing protocol at physical business locations, you can implement small tweaks and drastic overhauls all at once. Innovative ideas are never stalled.
Is This the Right Fit for You?
Online franchises are not right for everyone, and we encourage you to carefully consider your personal skills as well as the amount of time you can commit before choosing this as your next move. An online franchise is not a casual venture and will work best for individuals who thrive under a lot of pressure and enjoy working independently.
Alongside your work style, you should consider what types of businesses will work best for online operations. The best candidates are companies that don’t need to stock products and instead provide online services such as: writing, graphic design, tutoring, internet advertising, or technical support. While some franchisors help facilitate production and shipment, others will expect you to find an outside company to fulfil and ship product orders.
Before entering into an online business opportunity, it is important to check into the franchisor you are considering. What does their background look like? What is their financial and credit status? Are current franchisees experiencing success?
Some of these companies are corrupt, and a franchise could be swindle you out of a great deal of money. To ensure you have all the information you need, reach out to an experienced legal team.
At Garner, Ginsburg & Johnsen, P.A., we are here to provide support and expert guidance as you navigate the nuances of online franchising. Please reach out to us with any questions or concerns.