There are plenty of benefits to running a franchise: independence, small business experience with big business backing, and more. These benefits make franchise ownership a viable and successful business option. However, franchise ownership is not without its challenges.
While it is fair to say that the pros outweigh the cons when running a franchise, knowing the challenges you might face and how to overcome them is essential to success. Think about it, when a sports team is getting ready for the championship game, they don’t only review what they know well; they look at what the other team excels at, so they know where the challenges lie.
To run a successful franchise, you have to be prepared for the bad and the good. Here are a few challenges you might face in your new endeavor.
Reputation Based on Others
One of the best parts of purchasing a franchise is that you don’t have to worry about building a brand from scratch. You start with an established brand, marketing plan, and reputation. The challenge arises when someone associated with your brand does something scandalous or newsworthy.
While you might never dream of stealing money from a non-profit, the unsavory character who runs the same franchise a few towns over might. When they report his or her crime in the news, they will inevitably mention the name of your business. If you live in a small town, this can be especially damaging to your reputation.
This occurrence isn’t something you should fret about on a daily basis, but it is important to be aware of this possibility when running a franchise.
Structured Business Model
While having a structured business model is what makes franchises so successful, it can be challenging for the creative minded to adhere to it at all times. If the entrepreneurial spirit is what drove you to choose this path, you may find it extremely frustrating when you can’t execute the ideas and plans you think would help the business thrive.
While you might not be able to execute all of your ideas, be sure to share them with your franchisor nonetheless. Who knows, you may change the face of the business!
Formal Agreement and Contractual Obligation
It is important to remember that when you purchase a franchise, you are entering into a legal agreement with the franchisor. That means you will be sharing profits with them for as long as you run the business. You will be bound to their expectations and business model. They may get final say about which products you do or do not sell, which suppliers you must or must not use, and in which location you can run your business.
It is also worth noting that at the end of your franchise term (which will be written in your agreement) your franchisor is not required to renew. While you may be thriving in your new role as a franchisee, there is always the risk that your contract may come to a sudden end.
Why Risk It?
As previously mentioned, the pros to becoming a franchisee far outweigh the cons. A structured business model might be challenging for a creative spirit, but it will also help the creative spirit make money while running a business. The brand recognition and reputation from the get-go is far too valuable to give up on the off chance that someone might do something unsavory that could affect you. Formal agreements are a fact of life in the business world and you aren’t required to renew your franchise term either.
All in all, running a franchise is a great business option for aspiring entrepreneurs. You can get started relatively easily, with little experience, and even find franchises under 10k with which to start your journey. As with anything, it is important to be aware of the potential challenges and pitfalls you might face. In doing so, you will be able to see them coming and correct your course.
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