For many people the idea of punching the clock for someone else everyday is not an appealing option. If you have any kind of entrepreneurial spirit then owning your own business has a much greater appeal. However, when it comes to taking that leap of faith and leaving an established career to follow a dream, you open yourself up to a myriad of risks and a steep learning curve.
The way some people choose to offset the risks and learning curve involved in starting a new business is to buy a franchise.
What Is A Franchise?
When you enter into a franchise agreement you are provided with the trademark, advertising symbol, brand name, service mark and sometimes the full business training and marketing plans of an established commercial business.
In return, as the franchisee, you run the franchise according to the business plan, quality guidelines and product availability of the franchisor (the seller).
There are many franchise opportunities across a broad range of occupations and the minimum investment required to start a franchise varies from a relatively small amount up to a major financial commitment.
The success rates for franchised businesses are much higher than that of independently owned businesses. Part of the reason for this is the solid business plan and existing customer base you buy into when you enter a franchise agreement.
Is A Franchise Right For You?
With any business decision there are pros and cons to consider before signing any contracts. Deciding whether to buy a franchise, as opposed to starting a new independent business, requires research and a realistic idea of what your business aims are.
- You are the boss.
- Immediate customer base and established brand.
- Established advertising campaigns and marketing material.
- Management and technical assistance; with some franchises offering full training programs.
- Business model and plans done for you.
- New products or services developed by franchisor not you.
- Established suppliers for your product or service.
- Growth opportunities within an existing organization.
- Some franchisors offer financial assistance to get you started.
- Less risk than building a business from scratch.
- Systemized approach means no innovation or creativity as a business owner. You must abide by the franchisors rules and explicit instructions for the franchise.
- Your reputation as a business owner is attached to the reputation of the franchisor and other franchisees.
- Your success is dependant on the success of the franchisor.
- A percentage of your earnings per month must be paid as a royalty to the franchisor.
- Often you are locked into a supply contract that stipulates you cannot source materials for your business from anyone other than the companies that the franchisor has business dealings with.
- Under some agreements franchisees (you) must pay a percentage of the established advertising budget for the franchise.
- Long-term contracts (10 years) are standard for franchise agreements.
- Initial franchise fee.
- On-going service costs and lack of freedom to make business decisions.
Long hours, financial risk and factors outside your control are a part of all businesses including franchises. Take the time to study the specifics of franchise agreements versus starting your own company before committing your time and money. There are websites and magazines with self-tests to help you determine if you have the right personality and ideas to be successful and happy within the model of a franchised business.
You should also speak with a franchise attorney and a business consultant so you completely understand the legal contracts involved in owning and operating a franchise opportunity in Texas .
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