Could You Profit With a Franchise? Consider These 11 Pros and Cons

If you have dreamed about being an entrepreneur or being your own boss, running a franchise could be for you. Just make sure you understand what you're getting into first.

The downsides

A franchise business is not for everyone. Here are five potential drawbacks:

1. You’re following a template

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If you envision yourself in a business in which you have the unfettered ability to do what you want, skip a franchise.

Businesses operated under a franchise model often have to follow specific guidelines when it comes to marketing, pricing and operations. In addition, they may be limited to operating and advertising in a specific area. And if you want your business to grow, you may have to buy another franchise location to do so.

2. Upfront costs can be high

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There can be steep costs associated with starting a franchise, including costs you wouldn’t have with your own business, like the price of buying into the company.

You’ll probably need to go without a salary while you receive training, set up the business and hire employees. Once you do take in money, you’ll face expenses like payroll, rent, utilities and repaying any money you borrowed.

Your initial goal should be simply to generate enough income to cover your costs, meaning that it could be a while before you can take a salary.

Restaurants generally deliver high franchise returns, but they also have some of the highest startup costs, reports Entrepreneur Magazine:

“Most food franchises require a significant investment to get started. Food preparation stations, sinks, stoves and ovens, grease disposal systems, venting requirements, customer seating and bathroom areas — the list goes on.”

Mobile businesses — like mobile pet grooming, blinds installation, tech support or handyman services — require much smaller initial investments.

3. You share your revenue

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One feature of the franchise business model is that franchisees must share their revenue with corporate headquarters.

4. You must be all in, all the time

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Being a business owner is an exciting prospect, but don’t make big plans for your spare time just yet. You may be saying goodbye to the 9-to-5, but you could be saying hello to the 5-to-9. That would be 5 a.m. to 9 p.m.

5. You may not be cut out for it

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You don’t have to be an extrovert, but depending on the business you choose, it will likely help you a lot. Many franchise businesses require a lot of person-to-person contact. Sales, marketing and schmoozing with customers and suppliers may be a larger part of your work than you’d imagine.

Have you explored franchises as a business option? Share your experiences with us in comments below or on our Facebook page.

Marilyn Lewis contributed to this post.

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