pros and cons of franchising

Starting a new business is always a risk.  With unknowns in the economy and unexpected events, new business owners face a lot of challenges.  Opening a franchise can be one way to mitigate some of those risks but you need to know what you can expect.  Understanding the pros and cons of franchising can help you make the decision – to franchise or not to franchise.

Pros of Franchising

Ready-built system

This is the system developed by the franchise organization that makes sure that stores are the same from one location to the next.  It includes operating procedures, methods and physical standards for the business.  You know what you are getting each and every time you step into a particular fast-food restaurant, and while some franchise rules are more lax than others, the expectation is pretty much the same.

Training program

Because the franchise organization wants you to offer the same services or products in the same way that other franchisees do, they have training programs.  This means that even if you haven’t been in the particular industry – they will train you.  Good franchise organizations also provide tools or programs for staff or employee training – so you don’t have to teach what you don’t know.

Marketing plans

Most franchisors have a specific marketing plan.  Some, in fact, have national advertising so you don’t have to do anything but put up the signs they send you.  Others rely on brand recognition, and still others have plans and programs that you can customize to your area.  The point is that you don’t have to figure out how to market your new business. That aspect should be ready-built.

Product supply

One advantage of some franchises is that you already know what your products or services are.  You have a pre-defined type of inventory or service menu.  Even if your specific type of franchise has a wide variety of products, you usually get an advantage in group purchasing so your costs are kept down.

Franchise support

The franchise organization generally has corporate staff that can help you solve problems or issues that you have – at the beginning and along the way.  Support areas may include sales systems, marketing, build-out, and operational support.  Having an organization that can help you through the rough spots can be a big plus.

 

Cons of Franchising

Complex legalities

Franchising often requires additional legal contracts and filings with local authorities.  The minimum requirement is the Franchise Disclosure Document and signing of the Franchise Agreement.  A franchise is a long-term contractual commitment, with typical terms running 10-15 years.  If you can’t meet the obligations, you may be on the hook to the bank and/or to the franchise organization.

Rules

The franchisor often requires a lot of its franchisees in terms of operational continuity.  In order to protect the franchise brand, the corporation will limit the type of service or products, require specific uniforms and signage and demand adherence to any number of rules.  For some business owners, this is an unacceptable relationship as it may be interpreted as limited freedom.

Reputation

If you open a franchise with a great reputation – great!  But if the franchise has difficulties or even if one particular franchise location has significant negative PR exposure, it can affect the public’s view of your business.  You lose some control over the reputation of your store if you join a franchise.

Cost

Just like each business owner is there to make money, so is the franchise organization.  You are buying into a ready-made system and brand – and it isn’t free.  Depending on the business, franchise fees can be significant, both to open the business and on a continuing basis.

 

There are pros and cons to any business arrangement and the franchise business is no different.

Valvoline Instant Oil ChangeSM embraces the “cons” and we can show you how each “con” can actually become a “pro.”

VIOC does have policies and procedures that we require you to follow – we have built our procedures, policies and practices through years of owning our own stores and we solicit feedback from our franchise owners.

We believe our reputation to be top-notch,  aided by the recognition of the Valvoline™ name and the existence of nearly 1,000 VIOC locations – the only reputation you have to worry about is your own – and the best way to do that is by delivering consistent, predictable service to every customer, every time.

There is a cost to opening a franchise but our franchisees have learned that it is money well spent, and many go on to open multiple locations.

With VIOC, you are getting the Pros and the “good part” of the Cons, because we have already addressed them. Find out why VIOC is not your typical franchise.

(Source)

SHARING