Is a Franchise Business Opportunity the Right Choice for You?
A Home Business Article Contributed by Elizabeth Fox-Wise
What is a Franchise Business Opportunity?
When you purchase a franchise business opportunity you typically pay an initial franchise business fee, startup costs and sometimes continuing royalties (which are often a percentage of monthly gross sales) to a parent company for the rights to sell the parent company's products or services, the use of its established name and trademark, and often marketing and other support materials.
As part of the franchise agreement, you must operate the business opportunity following the parent company's standards and guidelines.
Advantages of a Franchise Business Opportunity
There are many things which attract an entrepreneur to a franchise business opportunity. Obviously there are some advantages to a franchise business opportunity, since statistics have found that they account for over $900 billion in sales each year.
Perhaps the biggest advantage to choosing a franchise business opportunity is the higher success rate that they carry. Purchasing a franchise business opportunity, in an established parent company, carries a lower risk of failure than starting a business from scratch.
One reason the risk is lower is because franchises usually have product names that your potential customer market is already familiar with. So you are more likely to feel the "product sells itself"
Additionally, the Franchise parent company usually will help provide professional startup advice and help the entrepreneur with operating difficulties on an ongoing basis.
Disadvantages of a Franchise Business Opportunity
As with everything, there is two sides to every coin and a franchise business opportunity is no exception to the rule. Some entrepreneurs do not choose a franchise business opportunity for several reasons.
A Franchise Business Opportunity can be expensive to purchase. Often requiring more start up capital than many entrepreneurs have at their disposal. Starting a business from scratch will sometimes allow you to start small and grow as the business can afford to. A Franchise Business Opportunity will probably require a larger outlay of money to get started, rather than allowing you to grow as money becomes available.
Franchises can be restrictive of the business opportunity owner, in their operations. For the true entrepreneur who is looking for the opportunity to be his own boss, make all of his own decisions and run his business any way that he chooses, a franchise business opportunity would probably not be the right choice. Most franchise parent companies have strict guidelines governing the marketing of their goods and services and the use of their name, under which you will have to operate your business. While it is your own business, the franchise will have some control over how it is run.
Owning a Franchise is not really owning your own business; but rather, you own a contract to operate your business opportunity. The franchise parent company has the right to renew your business contract or choose not to.
Obviously there are some very strong advantages and disadvantages to purchasing a franchise business opportunity. Weather or not it is a good choice to "go to the franchise" route or not, depends mainly on your own needs and wants from your business opportunity.
