It’s tough enough to decide on the type of business you want to get involved in as a sole proprietor to begin with.  However, throw in the concept of franchising a business, and the due diligence required is even more detailed and intense.  You always hear that pearl of wisdom or advice from an experienced person (or a know-it-all in some cases) --- “You need to consider all the ‘variables’ first, and don’t go off half-cocked about this.”  Sound familiar? It should.  Variables are a huge issue with franchising, in fact, some of the negatives appear almost punitive in nature.

So what are the real advantages? For one thing, it’s a quick-start type business.  The track record with the company name, the market recognition that comes with that company name, the fact that the business is already established around certain concepts and products --- these are major pluses in that you don’t have to endure all of these.  It’s already been done for you.

If expansion occurs, and you’re the franchisor, the royalties can be endless if the concept takes off and develops on a national or even global level.  As a franchisee, the expertise and training are always available to propel you into the next level of success.  It’s all right there in print on the contract --- most of the time.  Sometimes you have to do a little homework, like reading a book that may be entitled “Franchising for Dummies.”  Nonetheless, going into business for yourself is easier this way than the traditional way for the reasons that are stated above.

And the disadvantages? Well, first there is this issue called Conflicts.  I’m referring to the types of conflicts that can arise if either franchisor or franchisee are incompetent or possibly not acting in good faith in the way they conduct their business.  A franchisee that is incompetent can damage a company’s image very quickly.  On the other hand, a franchisor that is incompetent can ruin a franchisee’s attempts to be successful by not promoting the name or brands.  He can also ruin not only the franchisee’s chances at success, but their attitude if they are continually “milking” them out of profits.

Secondly, you have given up the Control factor.  Though it’s often touted as being your business, the franchisee does not have the complete control over the business like a sole owner would.  You can’t call your own shots, and everything you do has to have corporate approval (probably even going to the restroom involves a long distance call for the permission to do so).  A franchise is oftentimes referred to as a “wasting asset” due to the “finiteness” of the contractual terms.  Unless there is a clause in the contract stating the contrary, that franchisor is under no legal obligation to renew the franchise.

Finally, the “biggie” as I call it --- The Price.  Operating a franchise carries a lot of expenses that are passed on based on what the corporate budget reflects.  Even when you can find a cheaper source of office supplies, you’re not allowed to use that supplier.  Advertising contributions, franchise fees, and royalties can often spell disaster for the aspiring franchisee.  In most instances, you pay a percentage of the national advertising budget, and royalties come due and payable whether you’ve earned a profit or not.

Not to be redundant, but you really do need to consider all the variables before deciding on this venue for owning your own business.