Does franchising make sense?

rnIs it that this title returns with some critical views? Still, it seems to be a justified question. I was once on a panel, where I stated this question by considering it as a franchise conference. Now, you must have imagined the kind of response it received. I did this because I like putting me in discussions and also promoting the same that focuses on the progress made. Well, let us get back to the question. Does it make sense to buy a franchise? Is the franchise concept viable? When I put this question in front of the panel; then, the reaction was amazing. I often find it interesting to see people’s reaction. If they get defensive, one can deduce, there is a basis for the question. If people react defensively, I interpret it as a weakness. When one buys a franchise, they have to pay a fee that can be slightly more than 50,000 dollars. Also, on buying franchise, one has to pay royalties that can range as high as 10 percent of your gross revenues. Well, this task also requires you to sign a contract that can limit your flexibility because there are rules that must be followed. On not following the franchise business rules, you jeopardize your good standing and can lose the right to operate your business. So why would someone want to enter this type of arrangement? Particularly when you read about so many bad experiences that people have had with the franchise business industry, for those who are curious, such as Quiznos, Krispy Kreme and Cold Stone Creamery to name a few. Does this mean franchise consulting services is bad? In fact, if you select the right model; then, the benefits almost certainly exceed the costs. One should not forget about what they are getting on investing in a good franchise system: 1. Training or Support – You cannot underestimate the value of both initial training and ongoing support. 2. Brand Recognition – While some models have greater brand recognition than others; there are many established brands that can help you acquire and develop a strong customer base. 3. Buying Power – Since you are part of a group; you can leverage the power of cooperative advertising and have lower costs for leasing. 4. A proven system – Developing a franchise business model can be expensive. It takes time to work out the kinks. A good franchise concept model can eliminate these initial challenges and get you started on more sound footing. rnIt might be possible that not all franchise systems work. In fact, with over 3,000 plus available systems in the market today, the biggest challenge is finding one that is aligned with your interests and provides proof of success. If you want to buy a franchise, it is very important to thoroughly review their franchise business model. Make sure it is viable and can be successful in your market. One of the most important aspects of your research is when you speak with current franchisees in the system. They can attest to the quality of the franchise and how well the system works.