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A business owner is always in a quest of an opportunity to grow, whether by signing a big-budget project or by expanding their business through a new setup or franchise.
Talking about the franchise, is just diving into the concept of the franchise a great business growth plan? Perhaps franchising has proved to be a strategy to exponentially elevate the business graphs, but does it work for all kind of niche?
Maybe or maybe not! It’s better to take a broader view of your decision of opening a franchise, considering all its good and bads to avoid falling in any pitfalls.
Let’s have a glance at the pros and cons of franchising business to decide whether its a good idea or not.
Pros of opening a business franchise
- Reduced risk of failure
The first advantage of having a franchise for your business is its high chances of success. You are owning a business, you better know all what can help your business work out in the market and what are the things you need to keep in mind to make things work.
By setting up a franchise, you are imitating the same strategy as you apply for your already established business, but this time, the plan of action you have in hand is already tried and tested and has maximum chances of getting success, which thus reduces the pressure of loss and failure.
- A great way of business expansion
Starting a new business from scratch needs real hard work, time and money to be invested to make it a success. You as a business owner have to plan some workable strategy that can prove to be beneficial to your business idea to get you some bucks after you launch it in the industry.
On the other side when you are opting for the franchise option, there is no need for base investment that you need to make for its setup and fulfilling the basic needs like a source for raw materials and other working requirements.
This branch out and grow option can prove to be the best in terms of business expansion as it requires a very little effort for generating good revenue.
- Helps test run your idea in different areas
The concept of a business franchise can act as a great way to experiment with your idea all over again. Your business idea has got enough attention to identify whether it is acceptable for the people in the market.
It might also have worked well for a certain audience, but launching it all over again with a franchise will help you grab the attention of some new audience to test the idea acceptance all-over-again to decide whether the business has the potential to earn more than what it is earning by reaching to the wider range of audience.
- Increased profitability and growth speed.
Your business is already known by the people as they have been using your service, branching out a new setup providing the same service and the customer experience can then be a little easier.
People know what you serve, the trust you have built for your service from your main branch can help you get valued for the new business set out too.
It will symbolize the growth in terms of money and business value in the market, creating a buzz about how well your business worked in a very short span to launch out its franchise. Moreover, the double power that you get with your new setup will increase the growth speed to generate the revenue at a greater velocity.
- Increased Fundraising chances
Who doesn’t like to invest in a growing business? Most of the investors look for the business potential before planning to invest in some new venture. Setting up a new unit for a business that has already seen success makes them interested in investing their money. It becomes easier for a franchise owner to convince the investor as he has some real success data from its main setup.
Here what helps you get the main benefit is you can bring up your business name with the money of someone else and can make a benchmark for its business to compete with any of its contemporaries.
Cons of opening a business franchise
- Hitches to maintaining consistency
There are very few negatives for franchising your business, but one of them is the ability to maintain the essence of the original business idea and service. Yes, it happens in many cases that people seem to like the food of a particular restaurant in an area but simply hates the same from its other branch or franchise.
Yes, if we look at the other side of the coin, the chances of creating a negative image increases, if the business owners fail to maintain the consistency and the experience that they give to the customer that the original unit.
- Bigger team, more problems
Double the unit, double the workers and doubled would be the problems that you use to face with the single branch. To maintain an even workflow of your business, you would surely need a good management team who could take care of these small details that can help you maintain a proper balance between the work and your human resources.
As your team is what can help your business function well, so keeping them on track is what could be the possible hurdle with the increasing number of your business franchise.
Growing your business through a franchise can be a great step towards your business expansion only when you know if it’s the right choice for your business. Find the “why” and “how” before making this decision. The better you understand the answers to these questions, more is the probability of getting the right perspective to make some correct choices.
Hopefully, the above-mentioned pros and cons could help you enlighten about some real business aspects to consider before jumping into your first franchise unit.
James Vargas is an experienced business expert, consultant, and manager at Get Everything Delivered, startup growth consultancy. With the 1.5-decade corporate experience, he is now sharing his guidance to start-ups to grow with corporate team building activities and project delivery solutions.