What Are The Pros And Cons Of A Franchise Business As Franchisee?

Why Hire an Out-of-State Attorney?

 If you want to start a franchise business, you will understand that the business brings with it pros and cons.  

  Typically, any franchise business starts by signing an agreement, and the franchise pays some fees and agrees to comply with the business operations laws.

Although the franchisor has most of the control over the franchisee, the agreement is transparent, and if there are legal conditions, this brings about success for both parties.

Before you initiate a franchise business, you can consider the below pros and cons.

 Benefits Of Franchising

 Purchasing a franchise business has excellent benefits. However, all these tend to revolve around money, time, and energy.

  If one starts a business without the right advice, this could be a recipe to lose revenue. That’s why franchisees are advised to hire a lawyer for franchise agreements to help them understand what they are about to enter into.

 There are many pros to starting up a franchise business. Some of them include:

  • Access to a recognized brand:  The business has been proved to produce results based on the franchisor. A franchisee gets support in setting up the business. This information is readily available from operational support. That is, you will already be getting into an already established business with proven management.  The chances are that if the business has been on for many years, it may have steady revenue. The bottom line is that you will not be doing any market testing. This brings about a lower failure rate.
  • Less failure rate: You will be getting into a business with an already successful brand. While most of the franchise success or failure rates may sound too good to be true, it’s advisable to do your own research. You can get credible information from an experienced franchise attorney.
  • The franchisor provides the training needed for running the business. You also get access to suppliers and any ongoing operational support.
  • The franchisor offers information on the management of accounts issues with advertisement and sales, and much more. With this, a franchisee has some guaranteed security on the system.
  • You can get exclusive rights to sell your franchisor’s product within your area. Meaning, you stand a chance to build up your presence quickly and do it at minimal cost and risks.

The bottom is that if the business is successful, you make more money. Remember you will be working under a well-known brand and of course a big brand name.

  Cons Of Franchise Business

While there are pros, the business is also faced with disadvantages as follows.

  • No full control of the business. Although a franchisee may be termed as their own boss, the franchisor has excellent control over the decisions about the business. This is apparent in the restriction put on the annotated franchise agreement. For instance, the franchisor controls aspects of the business such as the product, what is to be advertised, the pricing, business location, etc.
  • Disputes:  Franchise agreement is prone to disputes. The reason could be the power imbalance. Again, as the franchisor has the power to decide on what to be done, sometimes this breeds up disagreement that can only be resolved through legal battles. Without a franchise attorney, this may become an uphill battle that will force the franchisee to lose revenue.
  • Startup cost:  You will need capital for whichever industry you opt for. While this may be seen as a con, later, it may turn out to be a worthy investment. You can choose to use the available options of coming up with the initial cost.

  Any agreement renewal is basically in the hands of a franchisor.  

  Starting Up A Franchise Business

 With the correct information, you can shorten your learning curve and dive into the buying and selling of franchise businesses with less hustle in terms of money and time.

  As earlier stipulated, performing due diligence and having principles of good management will be needed for the success of any franchise business.

 It should raise an eyebrow for any franchisee to develop the market or brands in their own area. In such a case, one is to be sure that it would generate enough returns to help make a capital gain in case of a sale.

 Once best thing is that before you delve into signing your franchise agreement, you will learn of the fees and the working capital for the start-up. It is recommended that you have a franchise attorney guide you during any negotiations about the license.

 While no business guarantees success, having the correct information and performance of the due diligence, this brings out chances of success in any franchise business.

   It’s, therefore, advisable for one to seek the help of a seasoned franchise attorney to help them understand what they are getting into.