The good and bad in franchising

A franchise is a very popular business option because the business immediately gains the advantage of bearing the name of a popular company. There is also ample technical support for the franchisee such staff training and even advertising so that the business will gain the needed attention from the first day.

But just like any business format, there are disadvantages and risks involved in franchising. Among them is the expensive start-up cost. Compared to starting your small business, franchise business costs nearly 40% more. The royalty fee and additional payments a franchisee has to pay the franchisor while engaged in the business always increases the start-up capital in this form of venture. The higher start-up cost doesn't even assure the franchisee success since there could be external conditions that might ruin the business' reputation. For example, when a branch in another state gains a bad reputation and as a franchisee, you'll be ruined too since bear the same name.

Because of the high rewards with equally high risk when using a franchise to establish a business, you need to carefully research about the company reputation especially on how they treat their franchisees. A simple search online should reveal your needed information in no time.
It's also important to select a franchise that's close to your hobby or preferred business idea. Without any passion for the type of business, you'll never be able to properly manage and prosper in the industry.

Last but not the least; never agree to any contract without reading the fine print and consulting the document with a lawyer. As already indicated, a franchise has a high start-up cost which means you need to know exactly how you should spend your capital.