The Pros and Cons of Franchising

There were nearly one million franchises in operation during 2014. America’s pre-packaged businesses have steadily grown over time as entrepreneurs buy into proven success. It is important that you consider franchising not to be a fool-proof business model. Success over time has equipped franchises with set processes that have both pros and cons for any potential owner.

Pro: A Proven Brand

The reason you may have decided to franchise is also the same reason as to why franchising can be so successful: brand recognition. A franchise succeeds where a start-up may struggle, by already having a customer base. There is a marketing strategy and infrastructure in place that they have been using with the proven success of other franchisees.

Pro: Set Costs

The cost of franchising is set in stone, so there are no surprises like you might have with your independent business. The franchiser has established relationships with reliable suppliers that help manage rates and provide you with reliable goods. Now the franchisee is free to maximize operation efficiency and increase revenue streams.

Pro: Established Infrastructure with Proven Success

A franchise has a successfully proven infrastructure in place that allows you to plug you and your employees into. From training practices to ongoing product research and development, these are business functions that you’ve bought into with your regular royalty payments. The groundwork that has already been laid by the franchise empowers your business to thrive while they provide innovation.

Con: Can Be More Costly

The cost of becoming a franchisee may be too high for most. Often the initial purchase of a franchise can be higher than starting your own independent business. There are also monthly and even annual royalties that are paid to the franchisor first, before you can get your money.

Con: You Own but You Don’t Operate

When you buy into a franchise you sign a franchise agreement. This legal document defines your relationship with the franchise, creating a clear separation between ownership and control. You may own your business, but the franchise controls the operation.

Con: Strict Operation Rules

You are required to follow the franchise’s rules that may leave no room for local adjustments. There may be a strict guideline for the goods you are required to use and the costs associated with them. This can inhibit you from being able to adapt to your local business environment.

Is Franchising Part of Your Business Ownership Journey?

Buying into a franchise is a great way to establish a business for yourself, but it does come with caveats that may not be for you. You will want to decide if the costs you pay into and the operations impact you concede to a successful infrastructure is a fair trade. Assess your personal expectations along with your local market to create a pros and cons list that will benefit you with your business ownership journey.

Contact Quest Consulting Services today to answer any of your franchising questions in the medical billing industry!

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