Advisory Dec, 07 2009

Measure the pros and cons before stepping ahead

Taking a franchise is a wise and profitable decision in many ways but an aspiring entrepreneur has to be cautious while taking it. Read below to know more

By Ramanjit Kaur
Feature Writer
Measure the pros and cons before stepping ahead

One cannot deny the fact that a business through franchising is like an icing on a cake. This is because franchising gives an entrepreneur or an aspirant franchisee with excessive leverages. But with such leverages also comes responsibilities. As Shahnaz Husain, Founder, Chairperson and Managing Director, says, “The franchisee enjoys several benefits of being associated with a renowned and established business. But, benefits also imply responsibilities. The franchisee has to ensure that the franchisor’s brand name and goodwill are not devalued. The franchisee is responsible for protecting, enhancing and promoting the brand name. In fact, the franchisee’s own success depends on it. It is important that all franchisees operate in accordance with the principles and standards of the franchisor’s business.”

Benefits of owning a franchise

Franchising is the easiest and quickest way to establish a successful business. Starting a new business through franchise route is a good option in number of ways. These are –

  • As a franchisee, you enjoy the brand name and popularity of the company’s product and services. In other words, no leg work is required for positioning the brand in the market 
  •  A franchisee enjoys cheaper advertising cost. Franchise is a great business model in terms of support and guidance provided by the franchisor to all his franchisees.
  • Moreover, as a franchisee you also enjoy the proven business tactics to make the franchise business succeed. So, you do not have to take any kind of business pressure especially during the initial phase and with time you develop a good knowledge and gain expertise in running a franchise business successfully.
  • Best part of owning a franchise business is that you and your employees will be provided with a regular training module to brush up your potentials and skills.

The other side of the coin

But being a franchisee can be a bit difficult at times. Let us discuss the various drawbacks of taking up a franchise business, which include –

  • When you take a franchise business, you need to pay one time franchise fees to sign up with the company, which at times may require huge investment.
  • Even being your own boss, you are answerable for your actions. Besides this, you have to follow the franchisor’s code of conduct. The franchisors usually have excess degree of control over their franchisees, which can be irritating sometimes.
  • Moreover, when you take franchise, you are restricted to buy products or services from other places. You have to buy the products or services from your franchisor even at higher rates than others.

But if you take an overall view of the franchise model, you will find it a better option than running a business independently. You can have the best franchise deal if you do extensive research before locking up on a particular franchise business. Also, you must review the franchise agreement thoroughly and negotiate the onerous provisions with the franchisor. To conclude it is always necessary to measure the pros and cons of a franchise before venturing into this route.

Related: Location: look out for the best

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