What are the pros and cons of being a franchisee?

Pros:

• Built-in customer base and loyalty

  One of the biggest pros of being a franchisee is that you have a built-in customer base that is already loyal to your brand. Starting your own business and growing a brand can be a long and expensive process. When you purchase a franchise you are likely to walk into a steady stream of revenue and established customers. It also helps in terms of your employees.

• Franchises are low risk

  This rolls right off the back of the last pro, franchises are typically low-risk business ventures because most franchises are already profitable and successful businesses. The franchisor has already done all of the heavy lifting, in terms of brand building, marketing, and customer outreach. The franchisee inherits all of this great work when they purchase a franchise.

• Instant access to suppliers

  Franchisees also benefit from the existing long-term relationships the franchisor has with suppliers. Franchisors are normally able to purchase supplies in large quantities or bulk. These large purchases typically drive down the supplies expense and this advantages franchisees as well.

• You get the support of the franchisor

  Franchisees experience the benefit of support and assistance from the franchisor. This holds throughout the lifespan of the business or however long the franchisee chooses to hold onto their franchise. This includes all different types of assistance and support, such as supplies and national or other large-scale marketing campaigns.

• High profits

  Because a franchisee's business is already established, it is not unusual for them to start generating high profits right out of the gate. In most cases, franchises make great returns on investment for franchisees.

Cons:

• Initial expenses

  Though a franchisee can step into high-profit generation right off the bat, the initial cost of purchasing a franchise can be quite expensive. This holds especially true for franchises that are very well-known and already quite profitable. The expenses can usually be recovered fairly quickly, but small business owners need to keep this fact in mind.

• Regulations

  While franchisees can be their boss to a degree, they are somewhat under the control of the franchisor. Meaning, certain decisions can not be made without the counsel or approval of the franchisor. For individuals who want to have total control of their business and how it operates, becoming a franchisee could be challenging.

• Privacy of finances

  Some franchise contracts have a clause on the franchisor's right to access and manage certain financial aspects of the franchisee's business. While some might not find a problem with this possibility, others might dislike the lack of autonomy and privacy.