Should You Open a Franchise? Weigh These Pros and Cons
Maybe you’re torn between opening a unique small business or becoming a franchisee for a company you know and love. If you’re thinking about opening a franchise, this guide from the Albert Lea-Freeborn County Chamber of Commerce will walk you through the pros and cons and provide tips on setting up an LLC and organizing your financial paperwork.
General Business Know-How
Whether you’re opening a franchise location or launching a brand new small business, you need to brush up on some general business knowledge. For instance, you’ll still want to create a business plan, outline a formal budget, and consider registering your company as an LLC if it’s an option for you.
Establishing LLC status for your small business or franchise brings numerous benefits, from limited liability to helpful tax breaks. If you’re short on funds, don’t worry — you can file as a registered agent on your own or use an affordable online formation platform rather than hiring a lawyer. Keep in mind that every state has its own LLC formation requirements, so look up the rules for your area before filing.
Organize Your Financial Records
No matter your business model, you need to keep your financial documents organized digitally so that you can always keep track of important paperwork. If you’re organizing PDFs and you want to turn a large PDF into a few smaller documents, you can use a tool to split a PDF online — in other words, to conveniently separate the pages. After saving the new file, you can download it, change its name, and easily share it with others.
Pro: Corporate Support
If you open a franchise location, you’ll get all the benefits of corporate support. You won’t have to work out your own store layout, product offerings, or marketing materials. However, how you share those marketing materials to connect with your audience is up to you. You’ll want to share informative, engaging content across social media for your franchise location to build your credibility within your community. To learn more about content marketing, check out online resources.
Con: High Start-Up Costs
Yes, opening a franchise comes with lots of welcome support — but it also comes at a cost. FranNet states that simply paying for an upfront franchise fee can run you anywhere from $20,000 to $50,000. You could also end up spending between $20,000 to $150,000 on required equipment. It’s easier to make cost-effective choices as an independent small business owner.
Pro: Lower Risks
Why don’t more people choose to start their own businesses? The answer is simple: there’s a high level of risk involved. But when you open a franchise, you’re part of a larger business model that’s already familiar to customers. In other words, your audience already exists when you open your doors — and they love your offerings!
Con: Lack of Independence
The lack of risk associated with franchise ownership is understandably appealing to many aspiring entrepreneurs. But the limited independence that comes with the model can feel restrictive. Vetted Biz states that franchise owners are essentially responsible for handling their location’s finances, hiring and managing teams, and reporting key performance indicators. You won’t be able to modify products or create new offerings, implement new company strategies, or even choose different suppliers. Being a franchise owner is about management, not strategy and creativity.
Opening a franchise is the best path to entrepreneurship for many people. But it’s not necessarily right for everyone. With these tips, you can figure out if you’re ready to become a franchisee, learn how to register as an LLC, and get your financial paperwork under control.
This Hot Deal is promoted by Albert Lea-Freeborn County Chamber of Commerce.