Even the Raintree brands that pride themselves on uniqueness and individuality, such as
, are careful to incorporate certain elements into each location that have been proven to work, ensuring that new Franchise Owners will be set up for similar success in their new locations.
You also won’t need to worry about creating new content or products; everything from Franchise Owner training to your menu, products, or services will follow the same guidelines as every other franchise location.
Finally, franchises are less likely to fail than small businesses, thanks to the strength of their business model and stronger brand identity in their market.
– While franchises do have fees associated with them (more on that in a minute), they tend to have lower startup fees. You won’t need to worry about paying employees or third-party services to create marketing materials, guidebooks, or even décor because the franchise will already have it created. If you purchase a pre-existing franchise, everything will most likely be included in the purchasing price, potentially saving you thousands. You’ll also find that banks are usually more willing to lend to potential Franchise Owners over start-ups due to the decrease in risk.
Cons of Franchising
Binding Legal Agreement – When you sign a franchise agreement, you agree to abide by a number of rules, ranging from what décor you use to where your business can be located. If you don’t abide by this agreement, you can lose your franchise. On the plus side, this agreement also entitles the franchise to provide you with things, from marketing materials to uniforms, which can save you money, time, and resources.
Less Creative Control – When you own your own business, you can do whatever you want with it, down to picking the napkin colors. If you don’t want to follow the rules or need to control every aspect of your business, a franchise isn’t going to be the right choice for you. You will need to follow the guidelines set forth by the franchise, and most are going to have little wiggle room when it comes to following their rules. Some people can find this stifling and are more likely to thrive if they can control multiple aspects of their business.
Fees – Franchises charge fees on top of other initial investment expenses including construction, buildout, furnishings, and inventory or materials. You’ll first have a franchise fee which can vary from a few thousand dollars to seven figures, depending which franchise you choose and how many territories you secure.
On top of this, you will need to pay monthly royalty fees to the Franchisor- a percentage of your gross profits, ranging from 4-12%. While these fees are low, you will have to pay them as long as you have the franchise. If your location is extremely successful, you may find yourself parting with hundreds of thousands of dollars a year in franchise royalty fees, which can feel disheartening. (On the other hand, there’s a good chance you may not have been able to earn that much revenue in the first place with a startup business of your own!)
Pros of Starting Your Own Business
Unbridled Creativity – Your business is exactly that: your business. You can do whatever you want with your business being you own it. If you are extremely creative and have a vision you want to execute, you are completely able to. This can be a huge plus for people looking to add innovative equipment or merchandise to their business.
Absolute Freedom – Franchises require specific work environments, décor, uniforms, and guidelines. Every minute detail is planned to the “T,” and this can be a turn-off for a lot of prospective business owners. With starting your own business, you can work wherever you want, when you want. You don’t need to report to anyone or follow someone else’s rules. As far as finances, you’ll be able to grow your business as large as you’d like. Want an international conglomerate? That’s simply not possible with a franchise. Finally, you can form relationships with vendors you want to use and trust, rather than having to use suppliers the franchise demands you utilize.
No Fees – Giving a mother company a percentage of your profits every month/year can be a hard sale. After all, you and your employees are doing the physical work. When you own your own business, all the profits belong to you and your company.