What are your options when you begin your business?
Once you make the decision to start your own business, you need to decide whether you want to be an independent business owner or a franchisee. STARTING A NEW BUSINESS:
ADVANTAGES
• independence and creative freedom
• usually lower start-up cost
• no inherited problems from an existing business
DISADVANTAGES
• costs more (fees royalties, supplies)
• smaller profit margins
• lack of independence and freedom
• difficult to achieve redress if franchisor fails to meet obligations
• a franchisor's problem may become your problem
BUYING A NEW FRANCHISE:
ADVANTAGES
reduced risk of failure over an independent business
proven methods and products
start-up assistance
on-going training and support
local, regional, and national advertising
collective purchasing power
research and development
association and synergy with other franchisees
easier to obtain financing
DISADVANTAGEScosts more (fees royalties, supplies)
smaller profit margins
lack of independence and freedom
difficult to achieve redress if franchisor fails to meet obligations
a franchisor's problem may become your problem
BUYING AN EXISTING FRANCHISE:
ADVANTAGES
• the business is already up and running
• risk and uncertainty are reducedthe basic infrastructure is in place:
established location
existing customers and reputation
employees
vendors
policies and procedures
cash flow
no start-up period-quicker profitability
easier to obtain financing
DISADVANTAGEStangible limitations:
design problems
location problems
merchandise problems
intangible limitations:
customer or employee ill will
pricing problems
inadequate procedures
lease problems
pontentially higher costs to buy
legal liability in inheriting lawsuits