Advantages and Disadvantages of Franchising
When considering starting a business, you’ll need to decide whether you want to start from scratch, or if you want to join into a franchise. This decision will depend on your goals and vision. While it can be exciting to begin a business independently, it could also pose a few risks. A franchise brings with it a host of benefits that can’t be found when you’re on your own. We’ve done a little homework for you so that you can make an informed decision about which option is best for you. Take a look below at our lists of advantages and disadvantages of franchising:
06 September 2021
When considering starting a business, you’ll need to decide whether you want to start from scratch, or if you want to join into a franchise. This decision will depend on your goals and vision. While it can be exciting to begin a business independently, it could also pose a few risks. A franchise brings with it a host of benefits that can’t be found when you’re on your own. We’ve done a little homework for you so that you can make an informed decision about which option is best for you.
Take a look below at our lists of advantages and disadvantages of franchising:
Advantages of Franchise Business for Buyers
There are several advantages of franchising for the franchisee, including:
Support and Assistance
A huge benefit for franchisees is the ‘safety net’ they have in the franchisor. Depending on the business model, and the agreement between the two parties, the franchisor may provide the franchisee with the knowledge, equipment, supplies, and marketing strategy; basically everything they need to operate the business, without having to start from the bottom.
Already-Established Brand Presence
A business is always trying to build up brand recognition and trust with customers and potential customers. New businesses often struggle to gain momentum with their brand authority, while franchises are typically already established and have a reputation to maintain. Franchises also generally have a well-established existing customer base for new franchisees to delve into.
Standalone businesses don’t have the same buying power as larger franchises, and will typically pay much more for supplies to manufacture products, depending on the size of the order. A network of franchises that offer the same goods will buy in bulk which saves a lot of money.
Regardless of whether it’s a standalone business or a franchise, there is always risk involved in buying and running a business. The risk of opening a franchise, however, is lower. Most franchises have tested and proven the business model of the franchise in multiple markets and are less likely to fail.
Disadvantages of Franchising for the Franchisee
There are also some disadvantages to take into consideration before buying a franchise.
Whilst the support of the franchisor is highly beneficial, it comes with the cost of needing to take the franchisor’s opinion into account each time you want to make a big business decision. This limits your independence and could become frustrating.
Because of these restrictions, there is a risk of conflict arising between the franchisee and the franchisor. The franchise agreement will stipulate limitations and boundaries for both parties, but sometimes disagreements will arise and will need to be sorted out efficiently and effectively.
Whether you’re looking to buy a franchise or an existing business, Business for Sale is the place to find your best options! You can also list your business for sale on our platform to get it noticed by loads of potential buyers. Contact our experts for more information.
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Independent grocery stores may find it a challenge to make a profit. Grocery stores make their profit based on volumes of customers. The Covid-19 pandemic put some pressure on supermarkets when everyone panicked about necessities like toilet paper. Supermarkets had to keep up with the demand, but also struggled under the regulations that prevented the sale of other regular items. Luckily, South Africa’s strictest lockdown levels have abated, giving most South African businesses the opportunity to pick up from where they left off.
Unlike many other products for sale, alcohol is one that is not seasonal. People consume alcohol all year round, and liquor sales have yet to drop due to external factors that would typically affect other industries. This makes it a reasonably safe bet to invest in, and become a part of.
Being an entrepreneur allows women to freely manage their own time and create a balance between family and work. ActionCOACH South Africa is offering women the amazing opportunity of running their own profitable and scalable Business Coaching practice. If you have a passion for business and for helping others, a track record of success and are looking for a way to utilize your skill set through a renewed breath of life, then business coaching might be for you! We offer the template into the market, resources, tools, support and professional training you need to succeed in business. Read our blog to find out Why Women Are Better Business Coaches.
The beauty industry is ever-popular in South Africa, and a great choice for buyers to delve into when looking into buying an existing business. Even after the decimating effects of COVID-19 on the economy, the beauty industry is standing strong, as people prioritise self-care. There are factors to keep in mind to ensure that you develop a successful business plan, before you invest in a salon for sale.
Choosing an existing business for sale is the easy part; by the time you’re considering buying a business, you already have an idea of which industry it will be in, its size, type, and all of the other particulars. The more complicated part is when it comes to applying for finance to buy a business. Very few people have the capital to use cash to buy the business, so it’s important to understand the ways and means of borrowing money and still making those dreams come true!
For the modern-day consumer, convenience is key. If something can be done faster and more effectively with minimal effort, that would be the option that the majority of consumers will choose. Having an e-commerce business means that your consumers can explore your product offering from wherever they are, whether at the office in between tasks or on their couch in their slippers. They don’t have to go to a store to pick and choose, stand in queues, and worry about pandemics.
When purchasing a CORO site, you’ll need to scrutinise the terms and conditions in place. It’s imperative to know whether the lease will be renewed by the oil company, or if the responsibility will fall on you as the buyer. This will need to be discussed and agreed upon before the purchase is made. In order to receive a suitable return on investment, the buyer should plan to operate the petrol station for at least ten years.
A franchise survey conducted by Sanlam in 2019 indicated that the South Africa’s franchise industry contributes just under 14% to the country’s GDP. Looking into buying a franchise for sale in South Africa is certainly worth it. Additionally, many franchises have stood strong in the midst of the devastating effects of the Coronavirus on the economy. There are many benefits of buying a franchise that has become more and more apparent.
As an entrepreneur, you are always on the lookout for a new opportunity, or to compare your business with what is available in the market. There are lots of benefits to buying an existing business than starting one from scratch. If you are buying your first business or if you are a seasoned entrepreneur, consider the following when deciding your next venture.
Before taking over a business, one should always conduct a proper due diligence. In fact, it is advisable to make any offer of an acquisition of a small or medium business subject to the completion of your own investigation into the affairs of the business. There are many methods to verify the numbers of an existing business and one can also use the services of a professional accountant who specializes in this field.
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