Continued from page 1
However, despite advantages to franchising, buying or starting a franchise business is not for everyone. Some of disadvantages to franchising are discussed in list below.
Cons of Franchise Businesses
Loss of control and freedom - since franchisor's standards have to be adhered to, a franchisee may have limited scope for individual personal initiative. Ongoing royalties could be as high as 10% (or more) of revenues - this amount could determine whether you business is profitable or not. The initial franchise fee can be quite substantial. It can range anywhere from $4,000 to $20,000 and, in some cases, up to $50,000! Advertising fees - there is usually a fee for advertising on a regional or national basis. If franchisor does not make best use of your advertising dollars, this could be a waste of money. Required Signage - most franchisors have a developed sign package that franchisee is required to purchase. This can be very expensive for small business owner. The franchisor's problems are also your problems - for example, you could have a serious issue if there was a conflict between franchisor and a major supplier. In summary, despite disadvantages of owning a franchise business, it generally offers real advantages with considerably reduced risks over going it on your own. All franchises are not created equal and research and due diligence should be done before starting or buying any franchise business. Franchising cannot guarantee a profit. You, as business owner, are ultimately responsible for success or failure of venture.
© 2002-03. GlobalBX. http://www.globalbx.com. All rights reserved. Buy a Business or Sell a Business on GlobalBX. GlobalBX is a free business for sale listing exchange that provides a confidential forum to facilitate buying and selling of businesses with thousands of businesses and franchises for sale as well as comprehensive business information for business buyers and business sellers. Lists businesses for sale, business brokers, and franchise opportunities.
Jim Brown is Director of Marketing at GlobalBX, http://www.globalbx.com. Buy a Business or Sell a Business on GlobalBX, a free business for sale listing exchange that provides a confidential forum to facilitate the buying and selling of businesses with thousands of businesses and franchises for sale as well as comprehensive business information for business buyers and business sellers. Lists businesses for sale, business brokers, and franchise opportunities.