Why Franchise When You Can Own?
For many people thinking about starting a business that is quick to get up and running and backed by the knowledge and support of proven industry professionals, franchising seems to be an almost obvious answer.
But often, the reality is that franchising is just an extravagantly expensive security blanket that helps a would-be business owner feel safe with what they're doing.
And when we say expensive, we mean it. For starters, nearly every franchisor requires proof of significant financial reserves held by the franchisee. A small fast food restaurant, for example, could require $500,000 in liquid assets and $1.5 million in net worth. That alone is enough to stop many people in their tracks.
The expenses of franchising keep piling up. At the very least, there will be attorneys and accountants whose work doesn't come cheap. Then, depending on the business, there are the costs of the build out, inventory buying, equipment, insurance, training, licensing, and of course rent, landscaping and signs. Not to mention advertising and promotional expenses for a grand opening.
Then there is the franchise fee. This is typically a one time fee to buy in to the brand. Most are around $20,000 to $30,000, but high end brands can be upwards of $100,000.
But once you've paid your way through all that, it's smooth sailing, right? Well, not exactly. Most franchises require a royalty fee, which is typically 4% to 8% of gross revenue. This alone can have a profound impact on a franchisee's bottom line.
And we haven't yet mentioned the most dreadful cost of all: the freedom to operate on your own terms. Inherent to the deal of franchising is extreme oversight and contractual obligations. A franchise doesn't run your way, it runs the company's way.
Franchises have rules for every aspect of your store, and there is no room for debate. The look of the store, the prices of products, even which products you can sell are chosen for you, and you have no say. This is often enough to crush the entrepreneurial spirit that made someone want to open a store in the first place.
Discount Retail Store Services can provide all the benefits that you get from franchising, with none of the downsides. You'll get support at every step along the way, connections to suppliers of all kinds, and access to a wealth of knowledge about how the industry works.
And you won't pay any franchise fee or royalty or be locked into a contract. You'll own your store, and you can run it how you want. We'll be here to help you do it.
So, to the topic question of this article, why would someone buy a franchise when they could own a store themselves? If they wanted a higher store package price, along with more fees, contractual obligations, and loss of control in exchange for the perceived security of having someone else make their decisions.
It doesn't sound like a great deal to us, either.