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Thread: Advantages of the Franchising System

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    Queen of the Forum Array KristineS's Avatar
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    Default Advantages of the Franchising System

    I found this list of 18 "Advantages of the Franchising System" . Some of them I agree with, but a few stand out as kind of misleading.

    Take #17 for instance: Defined territories of operation within the Franchise can help protect the Franchisee from competition.

    Defined territories will help protect the Franchisee from competition with other Franchisees but it won't protect from competition in general. A lot of franchises are fast food places or hair salons or something like that. They're going to face a lot of competition from other businesses outside the franchise doing the same thing.

    I think the list could be a little less misleading. What do you all think?

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    Post Impressionist Array vangogh's Avatar
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    That's a good list of benefits for owning a franchise. I have to agree with you about point #17. It would naturally help protect competition with other of the same franchise, but you are still going to have competition of other franchises and other similar businesses.

    In general the benefits do seem to indicate reduced risk and lower start up costs when taking into account the marketing and training you receive. It really does make a good case for buying into a franchise instead of going it alone.
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    I have to say the list is incredibly misleading. While there are many technical truths, they are presented in the "in a perfect world" format. The reality is not as wonderful.

    They need to change phrases like "The franchisor helps the franchisee" to "The frachisor should help, but does not promise any such claims explicitly in writing therefore holding the franchisor harmless in such cases where help is not provided to the franchisee."

    My training was 2 weeks long. When I opened my first store 6 months later I had another 2 weeks of training in my store. I didn't see my development agent for 7 years after that. Everything I know about running a profitable franchise I learned on my own.
    In my experience, the franchisor doesn't help, support, train, or assist; they force, insist, demand and inspect.

    The bottom line is, if you can't handle being bound by an ironclad contract that dictates the precise method in which you will run your business, where said methods can be changed whenever it suits the franchisor, and that holds the franchisee soley responsible for the outcome of everything, then owning a franchise is not for you.

    There's no short cut to success, franchise or otherwise. Whatever business you want to succeed in is going to take risk, hard work and sacrifice.
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    Coach, this is the sort of information that I'm really glad to see. I thought that list painted kind of a rosy picture which is why I posted it here. I was hoping you might give us your impression as you really have participated in a franchise.

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    Post Impressionist Array vangogh's Avatar
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    George I suspect you're right that the article is presenting an idealistic view of what the franchise should do as opposed to what it does do.

    I would imagine it depends on the franchise though. I'm sure there are those that do provide most of what we'd think they should while others provide very little. Just like any other business there will be good franchises and bad.

    Your experience does show that people should do their homework on the franchise before buying in.
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    Queen of the Forum Array KristineS's Avatar
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    Quote Originally Posted by vangogh View Post
    Your experience does show that people should do their homework on the franchise before buying in.
    Not only do their homework, but be realistic about their expectations. Starting up a franchise business isn't going to be any easier than starting up a stand alone business. Every new start up faces a lot of the same challenges and problems.

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    True. Like everything else it comes down to identifying the pros and cons and making an informed choice based on your goals and situation.
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    I think making the decision about whether to start a franchise is like anything else. You need to read what the franchise company has to say about the opportunity, but you also have to do independent research. Naturally the franchise company is going to put the opportunity in the best light possible, they want people to sign up to be franchisees. Independent verification is what will allow you to get the most accurate picture of the pluses and minuses of the opportunity.

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    franchising is great because it is where an organization gives another organization the right to use its name and operating methods , which is great to of goin international

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    If you have business savy and have the experience or willing to do the research, going alone is better than franchising in most cases. If you have little experience or not willing to put forth extra effort, use the franchise model, but you are giving a lot of money off the table in many cases.

    A smart business owner can market their business to the local population better than a franchise can. Also, they can make decisions without worrying if they violated something in their franchise agreement.

    I have known many franchise business owners. Most of them told me they would go alone instead of being a franchise, if they could have a do over.

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