Starting any business involves a certain amount of risk. Some owners thrive in going it on their own or building it from the ground up. However, some may find it more desirable to invest in the less risky option of purchasing a franchise. According to business experts, the advantages typically include:
- Brand recognition: Rather than trying to establish a new business in the marketplace, a franchisee can hit the ground running with corporate logos, branded products and broader name recognition.
- Effective advertising: New businesses have little chance to survive without effective advertising. Ad fees are often a part of franchise contracts, but the owner is often paying for top-shelf work at regional or national levels.
- Business guidance and training: The franchiser should walk the franchisee through the very complicated task of opening a successful business. They provide established standards and procedures refined over thousands of work hours and provide support and knowhow to meet unexpected challenges. It also helps that other owners have been through the process and can provide their insights.
- A good reputation: Due diligence before signing the contract should identify unscrupulous franchise partners (look for complaints from other franchisees at the Better Business Bureau).
- Safety in numbers: Multiple franchises means that there is also cover if there are labor issues or legal troubles.
It pays to be smart
Franchises cost thousands or even millions of dollars to launch. As with any business agreement involving large amounts of money, financial obligation and vending arrangements, it is wise to work with a business law attorney with experience handling start-ups or franchises. These legal professionals can help clients avoid unfair agreements or other business decisions they may later regret.