Is franchise truly a good business model to consider?
In the last three decades, franchising has become a popular business model that offers entrepreneurs a gateway to become business owners backed up with an existing brand and proven success rate. What is worthy considering is its commitment to a reduced risk rate and better access to resources for starting a business.
With the success of innovative ventures like MBA Chaiwala, franchising emerges as an enticing option for aspiring entrepreneurs seeking to enter the market with a sense of security and guidance. But, similar to other business ventures, franchising poses its own set of pros and cons that needs to be evaluated carefully before opting.
The pros
The most prominent benefit of choosing a franchise is the chance to use a brand’s recognition and reputation in favour of your business prospects. It is easy for a franchisee to tap into a pre- existing customer base and profit from already built customer loyalty. The key to success is that one need not to invest in building brand awareness. And this is something that significantly reduces the time and resources to establish a new business and keep up with customers faith.
Also, franchising allows a business personnel to access an efficient business model that runs on excellent operational support. And to get better knowledge of this, franchisees can opt for comprehensive training and ongoing guidance in areas such as marketing, operations, and customer service.
It has been helping everyone to navigate the complexities of business ownership with a keen sense of confidence. No one can deny the fact that this lucrative system can be invaluable for individuals who are burgeoning entrepreneurs with a lack of business experience in a niche market.
Many also claim that franchising bestows economies with scale and purchasing power that eventually allows a franchisee in cost cutting. One can easily negotiate bulk discounts concerning supplies, equipment, and other operational expenses. Franchisors are truly capable of allowing franchisees to achieve greater profit margins and higher profitability. All the enlisted reasons here allow franchising an attractive option for individuals who are seeking a way to enter a competitive market and enhance their ROI.
The cons
Well, indeed franchising is quite a lucrative option to consider, it is not untouched with the sets of challenges. The major demerit of franchising is the seed investment needed to buy a franchise of a brand. It has lots of aspects: franchise fees, royalties, and other startup costs.
Franchisees may also be responsible for ongoing fees and expenses associated with operating the business. In addition to this, the agreements of franchise are made on the strict guidelines and restrictions hindering the process of autonomy of franchisees. This process slows down the franchisee’s zeal to innovate and adapt as per the local market conditions.
What is an even more considerable issue here is that the conversion of a franchise ultimately depends on the strength of the brand. Hence, any enthusiast needs to put in great research on this subject to ensure they align with the values, goals, and expectations of the individual. And don’t forget franchisees should be prepared to commit significant time and effort to building and growing their business.
The takeaway
In the nutshell, we would assert that indeed franchising is a viable business solution for entrepreneurs who are seeking to enter the business realm under the parasol of an established brand. But, if the challenges to this system are addressed with the promise of reduced risk, this would definitely prove to be the best.