Advantages and Disadvantages of Franchising

Are you an aspiring entrepreneur looking to venture into the world of business ownership? Perhaps you’ve considered the advantages of franchising but find yourself concerned with the disadvantages too. In this article, we’ll explore the key advantages and disadvantages of franchising, looking at it from the eye of the franchisee. For more information about franchising opportunities at Oven Rescue, visit our franchise page.

Advantages of franchising

1. Established brand recognition

Established brands provide franchisees with instant credibility and trust in the eyes of consumers, eliminating the need to build brand awareness from scratch. This naturally gets things up and running quickly, as existing customers will often choose a familiar brand than one that is unknown to them.

With a strong brand comes high credibility and trust. This gives established brands autonomy on pricing, ensuring they meet the needs of the consumer whilst still keeping profit high.

2. Proven business model

Often, a business offers franchising options, it means they have a successful history. Adopting the franchising business model often means that the business owner sees plenty of potential to expand with untapped areas to explore.

Franchisees can essentially mitigate the risks associated with an independent, start-up business, as they are operating within a framework that has already shown viability. This proven track record increases the likelihood of profitability and sustainability for franchisees, making it an enticing choice.

3.  Training and support

Franchisors typically offer comprehensive training and ongoing support to franchisees, helping them navigate the complexities of running a business effectively. This
guidance ensures that franchisees are well-prepared to efficiently run and carry out work in their business.

4. Cost advantages

Franchise systems often benefit from cost advantages in purchasing, marketing, and operations, which can result in savings for franchisees. Starting a business from scratch would need a lot more initial start-up funding, whilst franchising offers a cost-effective solution for those looking to become a business owner.

5. Marketing and advertising

The hardest part about starting a business normally is finding customers. Marketing is a whole different job in itself and is something many business owners struggle with.

With an established franchise business, franchisees don’t have to worry about finding customers. Many franchises already have an existing customer base, with a lot coming for the company name and reputation.

6. Continuous innovation

Franchises need to consistently innovate to stay ahead of market trends. If you look at the top franchise businesses in the UK (McDonalds or Greggs for example), they are always finding new ways to attract customers, whether it be through new products, services, or forms of advertisements.

Franchisees can take advantage of the ongoing research and development efforts of the franchisor, gaining access to new technologies, products, and strategies that keep their business at the forefront of the industry.

7. Community and networking opportunities

Joining a franchise network provides opportunities for networking and collaboration with fellow franchisees. Franchises can discuss issues with each other and, as they’ll all be under the same company, can collaborate by providing solutions together.

On top of this, many businesses offer networking with other companies too. Here franchisees can meet people from other industries, giving deeper insight into how businesses function, but also finding new ways of attracting customers.

Disadvantages of franchising

1. Initial investment

All franchises require some form of investment in order to start operating under the business name. However, becoming a business owner will always require money at the start. It’s nigh impossible to capitalise on something profitable without at first funding it. Moreover, whilst it is an investment, franchise start up costs are lower than that of starting a brand new business. For example, Oven Rescue prides itself on low and transparent start up costs, especially for the benefits you get for signing up.

2. Lack of full autonomy

Franchisees are somewhat limited by the framework that the franchisor sets for them. Depending on the business, this can include the way the work is carried out, the marketing, or even the pricing of services.

Typically though, these frameworks exist for a reason. Growing franchises have shown success by their framework, so not having complete control can be a good thing for the overall longevity of the business.

3. Royalty fees

Franchisees will need to pay royalty fees to the franchisor on a recurring basis. These will differ depending on the terms of the contract, but will likely be based on profits and pricing of the services.

Whilst it may seem off-putting to be paying fees to a franchisor, this still heavily benefits the franchisee. For example, a percentage of royalty fees at Oven Rescue go back towards improving the business, such as through marketing and advertising channels.

4. Difference in vision

The vision of the franchisee may differ from that of the franchisor, and vice versa. Having different plans can cause internal conflict which may negatively impact business.

It’s important that franchisees explain exactly what they envision for the next few years, how they would like to grow, and what opportunities the franchisor can offer. This alleviates any conflicts in plans for both parties.

Explore the advantages of franchising at Oven Rescue

Franchising offers aspiring entrepreneurs a strong pathway to business ownership, combining the benefits of established brand recognition, proven business models, and robust training and support. Whilst it has some drawbacks, the advantages outweigh them in most cases, offering a fantastic and cost-effective opportunity for new business owners.

At Oven Rescue, we invite you to explore these advantages first-hand through our many taster days and new, arising opportunities. Speak with Mike today to find out exactly how we can help you start your own franchise business.

Email [email protected] or call 07772 991726 to get started.