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Evaluating the franchise option

On Behalf of | Dec 10, 2020 | Business & Commercial |

Starting any business from the ground up requires a lot of work and comes with some level of risk even with the best plan and market opportunity possible.

When opening a new business, entrepreneurs may choose to create their own company or they may choose to connect with an existing business that utilizes a franchise model.

Franchises cross multiple industries

As explained by Entrepreneur magazine, many franchise-based businesses exist across the country the globe. These businesses span multiple industries including restaurants, personal services, real estate, residential services, automotive businesses and more.

Some benefits of a franchise business

According to SmartAsset, some people like the idea of buying a franchise business because they can benefit from the strength of a known and trusted brand. They may also find this makes it easier for them to receive a business loan or other type of funding for their venture. Franchisors often provide a business plan to new franchisees that may give them much-needed help.

Some challenges of a franchise business

While franchisees do own their businesses, they also cede some control to the franchisors. This may not make the best situation for every business owner and requires careful consideration up front.

The costs associated with franchised businesses may also grow beyond what some franchisees can afford. In addition to an initial purchase price, franchisees may need to pay ongoing fees to the parent company.

Every franchise company operates differently

A potential franchisee should assess the franchisor for fit to help determine whether or not the relationship may succeed. This involves getting a clear understanding of all contract terms and the responsibilities of both parties.