- May 17, 2023
- Posted by General Electric Credit Union
- 5 read
Owning a Franchise: What to Consider Before Diving In
Franchises are everywhere. As of 2022, there are an estimated 790,500 in the U.S.1 From fast food to real estate, there are many industries that may pique your interest. Regardless of which one a business belongs to, it’s important to consider the pros and cons of owning a franchise. Doing so will help you gauge whether it’s the right move for you!
Brand awareness is a huge benefit to opening a franchise. You’re able to leverage existing public awareness, something you wouldn’t have in a traditional business launch. This may allow you to attract customers who already have loyalty to the brand. As a result, you can potentially grow and scale up faster.
The proven systems and processes of a franchise system will not only give you peace of mind in your investment, but it can also make your life easier as you take on the day to day of running the business. You’ll receive all the intellectual property (IP) as part of the relationship and can use it to hit the ground running and keep continuity between your franchise and others within the same “network.”
You’re in business for yourself, but you’re not by yourself when you invest in a franchise. You’ll receive initial training and support along with peer-level support from other franchisees. This can be especially beneficial if you’re new to business ownership or run into hiccups.
You’re not truly independent
Though franchise owners are considered small business owners, they’re not completely independent. This is important to consider, especially if independence is important to you. If you go the franchise route, just know that the brand and business model are created and maintained by the parent company.
The cost of owning a franchise can differ based on several factors, including the industry. In addition to a one-time franchising fee, you may have to budget for royalties, equipment, and other expenditures. Conduct a cost-benefit analysis so you can feel confident you’re making a sound financial decision.
Franchisees aren’t guaranteed to succeed. Know that, as is the case with all investments, you could lose the principal amount you paid upfront. And some of the factors that can hurt your bottom line are out of your control.
For example, one franchisee’s mismanagement and bad publicity could affect the business at your own franchise within the same network, making brand awareness a double-edged sword in some cases.
Watch General Electric Credit Union’s on-demand webinar, Intro to Franchise Ownership, to learn how to determine the perfect franchise opportunity for you. From the investment cost to your areas of interest, there are many things to consider before diving into this exciting business opportunity. When you’re ready to pursue owning a franchise, contact our Business Services team for personalized service and competitive business lending opportunities.