Should You Franchise Your Business?
The main goal of an entrepreneur is a successful business that makes money. It’s always good when a company is successful. After all, who doesn’t like making money? However, with success often comes tough decisions. What is your next step? How do you increase your revenue? Is franchising a good idea?
Franchising is not an easy task. Sure, you’ll have others managing the operations at other locations. However, finding the right franchisees to expand your business is complicated.
Should you expand your business or come up with other ideas to make a profit? Here are some pros and cons to consider.
Pros of Franchising
Franchising allows you to find hardworking and talented people to run your business. Instead of hiring a salaried employee, you can find someone who is willing to work hard and earn unlimited amounts of money. Franchisees are self-motivated because they control the outcome. They can come up with innovative strategies to reduce costs, boost sales and increase overall profits.
Franchising allows you to grow without using much of your own money. Franchisees pay into franchises, so you don’t have to get a loan or use some of your capital to expand your business.
There is also low risk involved. You aren’t putting out any money upfront and you can earn a significant amount of money from royalties without having to do any of the work. The franchisee directly manages the business, allowing you to focus on other things, such as creating new products.
Cons of Franchising
It is important to remember that each franchise is its own business. There is not much you can do to control them. The franchisee is not your employee. Plus, the goals are often different. Sales and profits are two different things. The franchisee may be more concerned about sales, but you want profits.
Franchisees often do not want to work together. They want someone else to pay for everything while they reap the profits. This weak community can negatively impact your bottom line.
It can also be difficult to convince franchisees to sell a new product or service. It often takes a bit of persuasion on your part to get franchisees to put specific innovations in place. This can be frustrating.
You will not make as much money as if you ran the entire operation on your own. You will only receive a portion of next receipts, which may only be a small percentage.
Learn More About Franchising
Franchising is a great way to grow a successful business, but it is not without its risks. It has many benefits but it has its drawbacks as well. Seeking legal help from an experienced business law attorney can help you determine if franchising is the right choice.
Orlando franchising lawyer B.F. Godfrey from Godfrey Legal can assess your company structure and point you in the right direction. He can help you protect your business if you choose to go the franchising route. Call his office at (407) 890-0023 or fill out the online form for a consultation.