Before you jump right into franchise ownership, it's important to understand what goes into it. Franchises can be a great way to get your business up and running quickly and with minimal hassle, but they're not for everyone. This article explores the upsides and downsides of franchising so that you can make an informed decision about whether it's the right path for you.
Start by Planning Things Out
When you buy a franchise, you are buying the right to use the franchisor's trade name, logo, and business model. But that's just the beginning. You also need to have a solid business plan in place to ensure success. Luckily, writing a business plan for a franchise is not that different from writing a business plan for any other business.
Sydle notes that the first step is to define your business goals and objectives. What are your plans for growth? How do you intend to generate revenue? Once you have a clear idea of your goals, you can start putting together your financial projections. This will include an estimate of your start-up costs, as well as your expected income and expenses. In addition, you'll need to include a marketing plan that outlines how you intend to promote your franchise.
Consider the Upsides
There are several upsides to owning a franchise, including:
The ability to get up and running quickly: when you open a franchise, you're essentially buying into an already-established brand. This means that you won't have to spend months (or even years) building up name recognition and customer base from scratch. Instead, you can hit the ground running from day one.
Turnkey operation: franchises offer a turnkey operation, which means that everything from the initial setup to the day-to-day operations is already taken care of for you. All you need to do is show up and run the business according to the franchisor's guidelines.
Increased chances of success: because franchises come with built-in brand recognition and proven systems, your chances of success are increased when compared to starting a brand-new business from scratch.
Have a Business Structure in Mind
When it comes to franchises, there are a lot of different business structures to choose from. However, one of the most popular options is the LLC, or limited liability company. LLCs offer a number of advantages for franchisees, including limited liability protection and flexibility in how the business is structured. Perhaps the biggest advantage of an LLC, however, is that it can help to shield franchisees from personal liability. If something goes wrong with the franchise, owners of an LLC can often avoid being held liable for any debts or damages.
You can set up your LLC yourself, but you might be better off enlisting the help of an online formation service that’s already familiar with the regulations for your area. To help you find the best formation service, simply search “BestLLCServices.com - is LegalZoom worth it” and browse the prices and reviews.
Consider the Downsides
Of course, there are also some downsides to franchising that you should be aware of before making your decision, including:
Lack of control: when you own a franchise, you will be required to operate your business according to the franchisor's guidelines. This can be limiting if you're someone who likes to have complete control over every aspect of your business.
Initial investment: ADP explains that franchises typically require a higher initial investment than starting a business from scratch. This is because you not only have to pay for the initial setup costs but also any ongoing royalties or fees required by the franchisor.
Restrictions on expansion: In some cases, franchisors may place restrictions on how and where you can expand your franchise. For example, they may require that all new locations be within a certain radius of existing ones. This can limit your ability to grow your business in the future.
Decide if Franchising is Right for You
There are both upsides and downsides to owning a franchise. Before making your decision, it's important that you understand what goes into franchising and whether it's the right path for you and your business goals. If you decide that franchising is right for you, we recommend considering an LLC structure for your business. An LLC offers personal asset protection and tax advantages that can be beneficial for any franchise owner. So weigh your options carefully, then decide whether franchise ownership is in your future.
written by Amy Collett
Amy is the creator of Biz Well [http://bizwell.org/], a website that helps professionals and entrepreneurs build and strengthen their personal brand. When she isn’t helping clients boost their careers or businesses, she enjoys coaching her daughter’s soccer team and training to become a yoga instructor.
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