Pros and Cons of Being a Franchisor

Are you thinking of becoming a franchisor for your business? Well, there is some good and bad news. The good news is that if you wish to expand, most of your capital will be coming from your franchisees. But like everything else, there are downsides to becoming a franchisor.

Benefits of Being a Franchisor

The benefits of being a franchisor are unparalleled. When you franchise your business, it expands rapidly. You can also be relieved from so many employee-associated difficulties. The store employees will be on the payroll of your franchisees, and you’ll have no role to play in their functioning. Besides, franchisees are highly motivated and driven to take the business to a greater height. On your part, you need to provide a practical and successful business model, adequate training, and exercise great caution in site selection and suitable franchisees. This is essential to succeed at your model and keep growing exponentially.

Disadvantages of Being a Franchisor

On the flip side, you’ll be sharing all your earnings. So, your business model must be sufficiently enduring to yield profits adequate for both you and the franchisee. Also, you’ll be engaging with franchisees who’re staking their life savings. If the franchise fails, you can be faced with severe consequences – financial losses, disputes, and lawsuits. Another disadvantage of becoming a franchisor is losing control over many facets of the store’s operations. There can be scalability issues, or your business model might not be easily replicable. So, you will have to put in a lot of thought before hastily becoming a franchisor and regretting later.

Is Becoming A Franchisor Worth It?

The short answer is yes. If you’re willing to do your part in a well-thought-out manner, becoming a franchisor is worth every effort. But make sure you’re franchising only if your business model can be part of your long-term growth strategies. Also, ultimately it’s about your talent, ability, finances, and circumstances that’ll determine the way forward. You could be the next McDonald’s, but it takes people with special skills to make it that big.

Remember, franchising is lucrative but expensive and doesn’t work for all businesses. So, you must structure it properly to get greater returns on your investments.

How to Become a Franchisor?

If you’ve made up your mind, you would wonder how to become a franchisor? We’d suggest you get organized, hire an attorney, build your brand, decide where you’d want to expand, and support your franchisees.

But, independent businesses interested in dipping their feet in the franchise waters must first consider their sales, structure, expertise, and business model. If your franchise model seems fit, get in touch with experienced, reliable, and dependable franchising experts to help you navigate the uncharted territory.

The franchise industry is heavily regulated, and you’d want to have an expert standing by your side to guide you through the process. At The Franchise Edge, we’ve helped numerous clients expand their businesses successfully, and we can help you too.

Talk to one of our consultants for a one-on-one consultation and explore our franchise development services.