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Established in 2001  •  $4.3+ Billion Raised  •  2,400+ Clients

You Want Franchise With That?

We talk to many prospective entrepreneurs every week. Many have decided that they want to go into their own business and be their own boss. After that decision is made, they must then decide if they want to enter the business world as an independent by launching (or buying) a one-of-a-kind business or by buying into a proven franchise.

Should You Buy a Franchise

We don’t have an opinion as to whether one approach is better than the other because there are so many issues (both personal and business) to consider. We believe that there are advantages to each. However, there are some particularly attractive reasons to buy a franchise that we’d like to share with you:

  • When you purchase a franchise, you get to do your due diligence before you buy. In the U.S., Federal and State laws require franchisors to fully disclose all of the pertinent details about a franchise before you buy.
  • A franchise, unless it is a new one, is a proven model or system. By the time you buy your franchise, all of the bugs should have been worked out.
  • Most franchises are existing brands that many people have already heard of, so when you hang your sign and open your doors your prospective customers know about you and know what to expect. In addition, you get marketing assistance from the franchisor.
  • When you buy a franchise, the franchisor has the responsibility of providing training and on-going support. That is one of the key things that you are paying for through your upfront franchise fee and royalty payments.
  • If you are in a retail business that requires a physical location, a franchisor will be able to provide assistance with site selection, real estate services, and construction.
  • Franchisees have purchasing power when they source inventory and supplies through a corporate-wide buying program.
  • Some franchisors will provide access to capital.
  • Many communities will provide benefits to franchisees that are willing to locate in their community and hire their residents.
  • Franchisees who wish to sell their businesses will often have a quicker and more lucrative exit because the business they are selling will often have an established market value and name recognition.
  • Franchisees usually experience reduced risk of failure and increased chances of success due to the fact that they will have been properly trained by the franchisor and the franchisor has provided the franchisee with a proven operating system.

It is important to remember that the benefits of buying a franchise are all dependent on the franchisor being successful. Not all franchisors are equal. Branded franchise concepts can be great business opportunities or can be catastrophic business failures in which you have invested your time, passion, energy, and capital. In next week’s blog post, “Consider these Criteria before You Buy a Franchise,” we will offer our thoughts on the important criteria a franchise should meet before you buy.

Related Services: Franchise Business Plan Consulting.

Avatar for Jimmy Lewin

Jimmy Lewin

Jimmy's background includes over 40 years in international, commercial, and investment banking, and nearly a decade as the principal shareholder and CEO of a rapidly growing manufacturing and distribution business in California. Today, Jimmy spends his time advising and consulting with entrepreneurs on matters related to business planning, as well as capital markets and funding strategies. Jimmy works with clients throughout the world in industries that include financial services, real estate, manufacturing and hospitality. View details.

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