The Advantages and Disadvantages of Franchising Businesses

📈Franchising allows entrepreneurs to leverage an established brand and reputation, reducing the risk of failure and providing a solid customer base.

📋Franchisees receive training, support, and access to corporate resources, such as marketing and advertising.

❌The cost of purchasing a franchise can be high, ranging from hundreds of thousands to millions of pounds.

💡Franchisees must pay ongoing fees and royalties to the franchisor, reducing their net profits.

📐Franchisees have limited control over their business, as they must adhere to the franchisor's established brand, products, and pricing.

What is a franchise?

—A franchise is a business model where a franchisee pays for the right to do business under the name and systems of an established franchisor.

What are the advantages of franchising?

—The advantages of franchising include leveraging an established brand, proven business processes, support from the franchisor, and an existing customer base.

What are the disadvantages of franchising?

—The disadvantages of franchising include high initial costs, ongoing fees and royalties, limited control over your business, and the need to adhere to the franchisor's established brand and pricing.

How much does it cost to buy a franchise?

—The cost of buying a franchise can vary, ranging from hundreds of thousands to millions of pounds, depending on the brand and industry.

Can franchisees make changes to the products and pricing?

—No, franchisees generally have limited control over their business and must adhere to the franchisor's established brand, products, and pricing.

00:05Franchising involves a franchisor and a franchisee, where the franchisee pays for the right to do business under the franchisor's name and systems.

00:32The main benefit of purchasing a franchise is leveraging the reputation of the franchisor and utilizing their established business processes and customer base.

01:13One advantage of buying a franchise is not having to establish your own brand and reputation, as you piggyback on an established brand name.

02:22Support, advice, and training are provided by many franchisors to ensure the franchisee's success.

03:49The cost of buying a franchise can be high, and franchisees must pay ongoing fees and royalties.