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Why You Shouldn’t buy a Franchise?

Why You Shouldn’t buy a Franchise?

When looking to start your own home based business one very popular option is to look at investing in a franchise. There are a number of advantages with franchises; an established name, a sales territory, sales leads, advertising and marketing, to name but some of the major benefits.

 

Well, at least that’s how most franchises would tell you. But just stop a minute and think this business model through.

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Unless it’s a very unique and specialist franchise, what possibly can be an advantage in investing in the name of a known brand?  Just think about this; you are buying a business name that (hopefully) is recognised by your potential customers, but how uniques or well respected is that brand, is it significant enough to mean any good independent competitors can’t compete?

 

That’s especially true when you remember you don’t have an exclusive sales territory – what that means is that no other franchisee can promote in your area, but you still have every other competitor in your sale area too.

 

What about those leads, well that may have some value, but how good are those leads? Are you still expected to follow-up on enquiries or are they actual orders? What if you can’t afford the investment in the franchise?

 

Well many franchises can arrange financing to help you start your franchise business, sound great – but you still have to pay the loan back, assuming you meet their requirements for lending in the first place.

 

Assuming you are still considering a franchise, ask yourself why are you getting in to your own home based business, is it to become independent and be able to run your own business the way you want to, to make as much profit as you can and keep the majority for yourself?

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You can probably tell I don’t have a high regard for franchises, don’t get me wrong some (like McDonalds) are great franchise opportunities, but they come with almost cast iron guarantees of success, many franchises don’t.

 

No, starting your own business is tough enough, but immediately committing to paying a franchise fee, plus a percentage of turnover (or target turnover) and potentially any financing, even before you pay yourself! Doesn’t sound like a great way to start your own business in my view.

 

If you want to have another job and/or another boss, then a franchise will surely take you there. I don’t think that’s for you though, else you wouldn’t have read this far.

If you want to start small and don’t have enough budget to buy a franchise, check out Passive School.

 

Have a great weekend.