Tamara Wood

What are the pros and cons of owning a franchise?

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1 Answer

Lachlan Handley

Lachlan Handley , Director at FIFO Capital NSW

I myself bought into a franchise. In brief the pro's are:

- you are not starting completely from scratch, someone else has taken time to develop and perfect the idea and hopefully got it to a stage where the product / service is a proven success and can be rolled out

- there should be a proven and documented system and a methodology you can implement

- you aren't on your own, head office should be able to provide you with guidance and support as you need it and you get the benefit of their learnings over time and experience

- there should be some existing brand awareness so you aren't a complete unknown

The con's are:

- in addition to the upfront franchise fee, there will be ongoing royalties which are generally a percentage of turnover

- there may also be fixed costs (e.g. marketing levy) you have to pay regardless of how well the business is going

- you may lose some flexibility as you have to work within the parameters of the franchise agreement (e.g. location, hours of operation, products, uniform, suppliers).

I personally never felt completely comfortable stepping out on my own and starting something from nothing (those brave enough to do that I salute you!), and I never had that big idea I could commercialise. So a franchise was a great way to take a proven concept, make it my own and run with it. Good luck!

Lachlan @ Fifo Capital

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