The pros and cons of being a franchise owner

woman with question marks over eyes

The perceived security of joining a franchise system tempts many potential and existing business owners at one time or another, especially during times of economic uncertainty. So, is now the right time to buy a franchise or is it best to fly your independent flag?

According to the Franchise Council of Australia, the franchising sector here represents total sales of approximately $130 billion and employs approximately 600,000 Australians. The FCA represents over 600 franchisors (who sell licenses to individual franchisees) working in industries ranging from fast food to beauty to hospitality to financial services and there are plenty more in addition to that figure. Further, around one quarter of our franchise systems have entered international markets.

Independent business operators employ a larger number of Australians and contribute more to the country’s GDP but are not necessarily in better or worse shape than their franchising peers, so deciding which way to go is not an easy decision.

Let’s look at the advantages of each…

Self-sufficient business

  1. You will not have to pay a franchise purchase fee.
  2. All profit generated from this business is yours (after tax and other operational costs, of course) and you can choose to do with it what you will.
  3. You can brand your business however you like and promote it via any means without first seeking approval.
  4. You can choose or create your own business management systems, procedures, policies and marketing activity.
  5. You do not have to meet a franchisor’s minimum performance standards.
  6. You are unaffected by a franchisor’s loss of reputation.

Franchise

  1. You are a few steps ahead in that there is an established business model to follow.
  2. You can leverage the franchisor’s brand, achievements and spend on everything from IT to marketing.
  3. You have on-hand a range of support, materials and advice from franchisor field staff.
  4. You are part of a collaborative network that may pool dollars and other resources.
  5. Many solid supplier relationships are already established.
  6. You may be able to get discounts on various products and services because you are part of a network of franchises.

Think carefully about what you need for your business in the short, mid and long term and which model will suit you best for each of those life stages. Will you welcome being part of a franchise system initially then feel restricted by its limitations as the years pass, or will you relish capitalising on your independent spirit then eventually struggle with the pressure of going solo?

It’s not an easy choice but there are certainly a ton of options to choose from… Australia is the land of plenty.

2 thoughts on “The pros and cons of being a franchise owner

  1. Ollie Pennington

    Unless you’re buying into a massive brand name (like McDonalds) go it alone. You’ll have a tough time getting started in business regardless of how you do it. The last thing you need is an overbearing franchisor demanding you comply with their self-serving marketing policies. If you go out alone you can sell to who you want, how you want, where you want and keep all your sales revenue.

    Reply
  2. Key

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