Understanding the Pros and Cons of Buying a Low-Cost Franchise
Low-cost franchises can be great, if they’re the right fit.
To many folks, opening a business and working for yourself is the epitome of the American Dream. Buying a franchise is a great way to accomplish that goal. And while purchasing a franchise may once have been a dream available to those who had already achieved a certain amount of financial success, these days there many good franchise opportunities with relatively low start-up costs.
However, not every franchise opportunity is a good one, and not every person is cut out to run his or her own franchise. If you’re thinking about buying into a potential opportunity, it’s important to consider the pros and cons of buying a franchise.
Start-up costs: The comparatively low start-up cost is one of the biggest benefits of buying a low-cost franchise. Still, low-cost is a relative term. New franchisees will still have to pay franchise fees and start-up costs that could range anywhere between $5,000 and $50,000. Plus, it’s important to remember that you get what you pay for: some franchise opportunities are cheap because the franchisor doesn’t provide much in the way of support. Be sure to do your homework and talk with other franchisees before making a commitment.
Flexible location: The vast majority of low-cost franchises are service businesses that can be run from anywhere, even from home. In the early stages of running a new business, not having to pay rent can be a great benefit. However, without a storefront, customers might not be aware of your business. Be prepared to put serious time and money into marketing your business.
Flexible working hours: With no boss to answer to, you get to decide when you work. This is a wonderful benefit for parents or anyone else who prefers a flexible schedule. But, as with any endeavor, you get out what you put in. A new business is a serious commitment, and you’ll probably need to devote more than 40 hours a week, especially at the start.
You’re the business: While you’ll still have to play by the franchisor’s rules, as the owner you’ll be responsible both for day-to-day operations and for a lot of big-picture decisions. And, you’ll also be responsible for providing whatever service it is your franchise offers, at least until you start generating enough revenue to be able to afford hiring staff. Make sure you have the skills necessary to provide a quality, reputable product.
If you’re thinking about purchasing a franchise, it is always a good idea to have the franchise agreement reviewed by an experienced attorney before you make a commitment. In the Twin Cities area, the attorneys at Garner, Ginsburg & Johnsen, P.A. can help with all aspects of franchise law including buying, selling, breach of contract and franchise territory protection.
After weighing the pros and cons of buying a franchise, if you wish to move forward contact one of our experienced franchise lawyers to help you along in the process.