Franchise business opportunities can be very attractive – but there are some very important facts you need to be aware of.
Over the years I have incorporated a number franchise business opportunities into some of my business on the basis that the franchise brand would attract more customers. However, I quickly discovered that the forecasts and costs were not what was predicted.
We have all heard of McDonald’s and the Starbucks and even thought to ourselves what it would be like to invest and own such a franchise business opportunity. Although a franchise may look like a very lucrative business opportunity, that’s not always the case. In fact many franchises fail with in the first year of starting.
Many people are looking for small business ideas and the idea of a franchise opportunity very often appeals due to the comfort of being able to sell a well known brand and having support readily available when help and advice is needed. Most people think that a franchise business opportunity is the perfect business to own. It is a business model that can work well if it has a proven brand or idea that can make money. However there are many risks involved in opening up a franchise.
The biggest problem with a small franchise business opportunity idea is the start up costs. The franchise costs do vary between thousands to millions of pounds / dollars. The average McDonald’s start up cost is between 250k and 500k with many more franchises costing the same. However, the cost involved always comes down to the type of franchise and how well known it is. The other huge costs people over look are the yearly royalties that need to be paid out as well as on some occasions a percentage of the profits you make. So as you can see despite all of the hard work, time and effort you put into your franchise business opportunity the profits can get smaller and smaller.
In some ways owning a franchise means that you are still working for someone else i.e. the franchise company rather than yourself. Some have very lax regulations, whereby you are able to make the decisions but other franchise companies keep control on everything that you do. If you decide that the franchise contract you have entered into is not working for you it can be difficult to sell on the franchise. So keep that in mind when you look at buying a franchise business opportunity or idea.
Not all is lost with franchising as some franchising business opportunities far outweigh any risks involved, but ensure that you seek outside advice from an accountant and solicitor before entering into any contract. Make sure you use your common sense and that you choose the right franchise for the lifestyle and the business model you want to follow other wise you may regret it.
I did enjoy operating the franchises I ran but mainly because I had complete control over them and the amount of royalty payments that I paid each year. That said with the business models and successful alternatives we now share with individuals seeking to start their own business I would have to be biased and advice them to go with one of the alternatives we have readily available. They really do offer the best alternative to franchise business opportunities, the start up costs are often minimal and offer extremely high profit margins.
To learn more about exciting alternatives to franchise business opportunities visit our information page here