Learn the Advantages and Disadvantages of This Franchise Before

Thanks to the convenience and benefits offered, franchise or franchising businesses are in great demand.

This business concept indeed allows you to immediately sell, because everything from trading equipment has been prepared by the franchise owner.

In addition, it is considered easier and more profitable than having to start a business from scratch.

With a franchise business, you usually don't have to bother spreading awareness anymore, because the franchise product is well known by the public. But, of course, business has its pluses and minuses.

Well, before you run, make sure you know the advantages and disadvantages of the franchise, as follows.

Franchise Business Advantages

Talking about the franchise business, it sounds easy to do because it has advantages over other businesses.

Here are the benefits that you will get by running a franchise.

1. The Business Is Already Established

The advantage of the first franchise is that you can run a business with well-established management.

The reason is, you no longer need to bother thinking about business ideas, brands, systems, and even products to sell.

You see, these important things have been tested and you only need to manage them and then run them in a new location.

2. The Community Already Know The Brand

Furthermore, you also don't need to spend a lot of money to spread awareness to the public. The reason?  because your product is already known by the public, so it is easier for you to sell it and reach new consumers.

Of course, this is more profitable than when you build your business from scratch. Moreover, if the franchise of your choice is a well-known brand, consumers can come by itself.

3. Easier Financial Management

You don't need to worry when it comes to financial management. Usually you will be given a business system including finances that have been tested easy, and not troublesome.

So, if you choose a franchise that is quite well known, they even have their own system that makes it difficult for you to carry out financial management.

4. Easy to Get Raw Materials

You will work with franchise owners when running this business, so even regarding raw materials, you don't have to worry about finding it difficult because everything is provided by them.

Yes, they will provide you with a complete product supply, so you don't have to worry about running out of raw materials to sell.

5. Get Support from Franchise Owners

By joining a franchise, you will also get a lot of support from franchise owners.

It is not impossible, before starting a business you will be given training on business, financial management, marketing strategies and others.

In addition, they also don't hesitate to help you in terms of promoting products.

Disadvantages of Franchise Business

Now let's talk about franchise losses.

Yes, even though it looks easy to do, but like any other business, franchising also has disadvantages which if not handled properly can affect the sustainability of your business. Anything?

1. Less Flexible because of Full Control by the Franchise Owner

The disadvantage of the first franchise, you will feel less flexible in doing business.

The reason is, full control of your product and business will be owned by the franchisor or franchise owner.

What are the consequences?

You will find it difficult to make innovations or changes to products. Usually you will have a contract which contains not just being allowed to tamper with the product, without the permission of the franchise owner. Even though you can, you have to discuss it with them first, and if they agree then you can do it.

2. Only Have a Single Supplier for Raw Materials

Indeed, you will not experience a shortage of raw materials and will have no trouble getting them because the franchisor will provide the stock.

You, as a franchiser, also have a contract and an obligation to buy from them. This makes you unable to freely buy raw materials in other places that may be more affordable.

3. Business Reputation Easily Affected

Businessmen who buy franchises are not only you, but many people are scattered in every region. Even though each franchiser is a different person, you are selling one product from the same brand.

So, when for example 1 franchise has a problem, you will be affected even though you are not directly involved.A bad reputation will certainly affect the income turnover that you will get later.

4. Provide Fees to Franchise OwnersBefore starting a franchise business, you usually have to pay a number of funds as initial capital.

Well, the price itself can be considered high, especially if you intend to buy a franchise license from a well-known brand. Not only that, you may also be required to pay training fees, or something else.

5. There is Profit Sharing

There are some franchises that charge profit sharing to the franchisees. Usually, they are required to give a few percent of the profits they get to the franchise owner. Of course, this will reduce the income you generate, right?

Well, but take it easy because not all franchises run this system.  Therefore, make sure you get clarity from them before starting.

The advantages and disadvantages of the franchise described above, cannot be avoided, but you can minimize them in various ways.  In essence, running a business cannot always be profitable, but losses also threaten.

So now we discuss the advantages and disadvantages of franchising.  Another problem that is no less important than when running a business is a lack of sources of funds or venture capital.

Share this post