Considering buying a franchise? Before you do, you need to see what the Advantages and Disadvantages of buying a franchise are.
When considering buying a franchise there are some factors to consider and depending on your experience in the industry this will affect your decision to buy a franchise
Advantages of Buying a Franchise
Established name brand:
Starting from scratch requires establishing a brand and competing against established brands, this is where buying into a franchise helps, brands like KFC, Steers, or Wimpy, are all established brands that are well known.
Successful and tested business process:
Franchising is more than buying the rights to use an established trade name, you are also buying into a business model that has shown to work elsewhere.
You own the business:
When buying a franchise you own the business, however, the operation of the business is subject to the clauses contained in the franchise agreement.
As a franchisee, you are only responsible for local advertising, the franchisor handles all nationwide advertising and often provides advertising material to the Franchisee.
Training & Support:
As a Franchisee you will have access to an operations and procedures manual, and a field service consultant (FSC) will visit you and offer on-site assistance. Additional Franchisors can a troubleshooting service.Read: GAAP Point of Sale(Pty)Ltd Appointed Exclusive POS Supplier to KFC Africa
Disadvantages of Buying a Franchise
Regardless of if you start your own restaurant or buy a franchise, you will need to be self-disciplined. Running a restaurant requires putting in the hours and the necessary enthusiasm to ensure the success of the business.
Buying a franchise is costly, firstly there is an initial fee you need to pay for the rights to the business, training, and the equipment required by that particular franchise. Once you are operating, you will need to pay the franchisor an ongoing royalty payment usually calculated as a percentage of the gross sales.Read: How much does it costs to open a top fast food franchise in South Africa ?
Although you own the business, you don’t have control over the business model. The Franchisor manages all business methods, signage, logos particular to uniforms. Remember that you are buying the right to use the successful and tested business process.
As a Franchisee, you are part of a wider network all operating under one brand, and if there is an incongruity in service quality from one outlet to another it can affect the reputation of the whole Brand.
You have to do your homework before buying a franchise, you need to do some research on the following:
- The Franchise you are interested in
- What are the costs?
- Policies and procedures
- The area you want to operate in
- What other restaurants are there?
- Does the franchise already operate in the area
- Will the Franchise approve the site
- The market
- Is there a demand for your restaurant?
- What is the economy doing?
- Buying Habits and trends
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