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Thinking About Buying a Franchise? Read This First

Written by Chloe Smith

You’ve probably thought about starting your own company and running your own business, it is the primal drive behind almost every successful entrepreneur, however, starting and running your own business is quite a challenging task. It requires incredible amounts of time, effort, and resources too. That’s where the prospect of buying a franchise may be a suitable option to fuel your dream of running your own business.

So why would you want to buy a franchise?  To start it is an option that can be completely in sync with your professional goals and the franchise itself may hold incredible value. In this article, we present a guide on what’s involved with purchasing a franchise, the different types of business models available and what you need to know.

Is buying a franchise for you?

There are a few things you need to have in mind when it comes to buying a franchise. As it is an existing business with most of the predefined sets of rules, you will have to defer to the parent company for any major decisions. This can throw a lot of people off, but it can also help you a lot with the decision-making process.

Another thing you have to think about is whether or not you are financially prepared for this endeavour. When you’re running a franchise business, your upfront costs are usually much higher. That’s why you will have to be financially ready for them while also being ready to grow. One of the main characteristics of running a franchise is aggressive growth, so keep that in mind.

Running your own business calls for much more time and effort. Being your own boss means there isn’t anyone else who can make things work instead of you. You need some serious organisational skills, as well as a team of professionals to help you understand how to grow your business. When you buy a franchise, most of those issues are covered by the parent company.

Pros and Cons of buying a franchise

As with any other business model, buying and running a franchise have its own perks and challenges. Here are some of them.

PROS

  • When you buy a franchise, you’re buying an instantly recognisable brand, with an already developed audience.
  • It’s much easier to rebrand the franchise to boost reputation, than to rebrand a new company, in order to get a better reach.
  • If you’re inexperienced in running a company, you will get all the necessary help you need from the parent company. They will help you learn how the market works and what to do.

CONS

  • Startup costs are way higher than they would be if you would just start a new business.
  • As you’re under the protection of the parent company, you don’t have much freedom to do what you want without their consideration.
  • It can be a bit hard to earn money early on when you’re running a franchise. Profit margins are usually higher in independent locations.

What franchise should I buy?

When you start researching, you may notice that there are various different types of franchises you could buy. Some of those options might suit you better than others, but it usually depends on two things. The first thing is – how much do you want a specific franchise, while the second one is – how much do your surroundings want or need that franchise.

Whether you opt in for a mobile van-bar franchise, a dog grooming salon, or you would like to focus on the art of brewing tea professionally and want to buy a reputable fast growing franchise in Australia, you will have to do some researching. Learn about local trends and markets. Explore all of the fast-growing franchises in your region and find the one that suits your needs in the best possible way.

Different franchise types mean different opportunities. As each business has its own evolution curve, you will find some franchises are simply better than others. For example, a mobile dog grooming salon might be an absolute hit in areas with large backyards. Coffee shops are usually placed near business areas, so make sure you know as much as you can about where and how you’re planning to run your franchise.

Key takeaways

So, what have we learned about buying a franchise so far? First of all, it can really help you learn a lot about running a serious business. Secondly, it can lead you to your first serious business success, and finally it’s a great way to start a business!

Here are some of the key takeaways to keep in mind:

  • When you’re deciding on a location, make sure you talk with professionals. Consult them regardless of whether you’re looking to buy a reputable fast growing franchise in Australia and delve deeper into the art of brewing tea, or you’re looking for something closer to home. Without professional help, you might regret your decision, and many of these franchises will be there to help you along the way.
  • As much as you gain from the reputation of a known franchise, there are loads of legal issues that buying a franchise brings along. You must make sure your legal team has fully reviewed and understood all of the legal ramifications of any contract you might sign.
  • Keep a close eye on your budget. As we’ve mentioned earlier buying and running a franchise is a more expensive endeavour than starting your own company. Make sure you have at least 6 months full of operating expenses ready.

Wrapping It Up

Provided you understand exactly what industry you want to focus on, buying and running a franchise is something that you enjoy. Once you fully understand all the pros and cons, as well as all the legal aspects of buying and running a franchise, you will be ready to explore new opportunities. Who knows, maybe this business model is the best for you as an entrepreneur.

“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."

About the author

Chloe Smith

Chloe Smith is a design enthusiast and a part-time writer always willing to share tidbits of advice. She believes that passion, courage and, above all, knowledge breed success. When she’s not working, she’s probably somewhere cuddled up with a good book, and a cup of lemongrass tea (or more honestly binge-watching the newest Netflix hit show).