It really depends what you're looking for. By buying into a 'Franchise' remember you're buying the name, or more appropriately, name recognition. This does not completely mitigate risk when taking on the business but it will provide with you additional documentation, i.e. costs, sales, marketing expenses that other franchises have experienced over the years. This way it gives a comparison point to start from. A good way to look at it would be to furcate the cost of starting a franchise, i.e. there will be an initial equipment cost, licensing fees, royalty fees, etc. Separate each one out into separate categories. The easiest would be to look at the equipment they are selling as part of your store set-up. Do cost comparisons, can you find the equipment cheaper? Many times the franchise will want you to purchase from their specific vendors but this is not always the case.
Secondly, call around to other franchise owners, even if its a 'cold call' and ask what their experience has been with the company. Make sure that they are offering good customer support. There may even be an operation near your area where you can go into the store and take a look around.
Thirdly, ask what you will get in return for your investment in terms of marketing, do you get a free webstore? Are orders filtered through the home office and then sent out to various franchises? What are the do's and dont's when it comes to running your business.
Then ask yourself, is it more cost effective to purchase my own equipment and build a brand myself? Do I have the time and commitment to truly develop a brand or would I rather go more 'straight into production' as opposed to building from the ground up. Once you have determined this you'll at least have an objective view as to what you are getting into.
I know this subject has came up before and many people have different opinions. I think a franchise is great for a restaurant chain( to assure the food taste the same). I don't see a advantage in the Garment decoration field. I actually see a disadvantage. I know most franchises require a certain look for their store fronts. This is a cost factor because in most cases you have to maintain a certain size and a certain look. I would think making my store look different is a advantage. I know they give training on the machines( you get training with new equipment anyway),marketing( you can go to seminars for this feature). In my opinion they offer a lot of services that can be found without the cost of franchise fees. I know several people that would disagree and several that would agree I like buying equipment and operating a business is hard enough from the start to have to pay extra fees and have extra rules of operation to deal with,I think the real winner in the Franchise is the people collecting the fess and not doing the work. .... JB
Just my humble opinion, but I think there are more disadvantages to franchises than advantages. I also think your start-up, and continuing operating costs are inflated with a franchise.
When operating a franchise unit, you're left with very few choices. And often you're required to purchase everything through the franchisors approved vendors, so you can't even shop for a better deal, or design your own forms.
I agree that what the franchisor offers the franchisee in the way of training can be found elsewhere, and at a much cheaper price than the buy-in and royalties you'll have to pay on your sales.
It's a really great deal for the franchisor, but not so good for the franchisee.
After five years in operation over 75% of franchises are successful. In contrast, less than 20% of startups are successful after five years in operation and the fallout rate in the first two years is staggering.
There are huge advantages in owning a franchise but it really depends on your level of knowledge in your industry of choice and your experience as a business owner. If you are a novice in your industry and have no business experience then the right franchise can offer you a substantial jump start that might take you months or years on your own. A few things to consider when purchasing a retail franchise.
Size of space required - smaller is better for overhead reasons
Number of employees required to operate - fewer is better for management reasons
Hours of operation - lifestyle question
Outside sales required? - not everyone can sell
Franchise fees -
Royalty fees -
Startup fees -
90 days working capitol required -
Well written operations manual -
Training and support -
Revenue - be cautious of franchisors that do not have an earnings claim
Cooperative Marketing Opportunities? - in a coop it is affordable to do radio and tv ads
How many stores opened in how long -
How many defaults and why -
There are many other considerations but these are some important ones. I actually own a franchise and would do it again in a millisecond. Also, a good franchise is either the first or the best. If they're both it can be a real winner. Mine is the first and the best.
its also vital to get in writing how many stores they allow to open within a certain radius of your store. I read a NY times article how a very famous franchise was opening stores too close to each other and in gas stations, etc. They would buy back the equipment on the ones that failed at about 10 cents on the dollar -
As someone already mentioned, Fanchise in this custom type business is dangerous.
Most companies I've learned about (the the kiosk Cust-shirt) that HAVE setup franchises in MALLs etc... have gone out out business thru out the years since the 70's and had to buy back leases,etc.. etc....
It does not mean that it is impossible, some manage but a MR. SUB or a GAMEs store maybe a better option.
Keep in mind that setting up your own retail out let store in a mall, street, online or all is a very small capital investement comparing to a restaurant for example. The operation of such is also not as complicated as other franchise type businesses. It is relatively easy to set up a store/business of this type (*Custom T-Shirts*).
There are other topics here that give you a basic run down how to DIY.
Basically, a franchise store front allows you to step into a professional opratation in class A-B-C locations pratically as a turn key operation, ready to sell.
...just a few thoughts. (im not an expert, just thoughts).
I am giving it some serious thought about opening a store and moving the business out of the RV. I have been looking at two franchises and would agree that the money they want for what they offer is not the best investment. However, they do offer a name, training, support, and a proven system of running a successful business. So my question is for those of you that are independent and have a store front, did you look at a franchise? Why or why not? Why did you go independent? What words of advice do you have for a serious newcomer?
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