Setting up a franchise company – advantages and disadvantages

If you decide to start a franchise business, the greatest benefit for you is that you are implementing a tried and tested business idea. So it is obvious that there is a market for the product or service you are offering. You can benefit from the experience of the other franchise brand development partners¬† and you don’t have to make every mistake yourself. You know roughly what costs you will have to pay and what income is realistic. You have access to clear structures and are relieved of many strategic tasks. The advertising campaigns are conceived in the headquarters and then implemented nationwide – which in turn increases their effectiveness. In general, it is easier to join a well-known brand than to start from scratch. The recognition value is high and thanks to the identification of the customers with the brand you can generate good sales.

A reputable franchise system will support you in many ways in starting and running your own business. This ranges from the documentation, in which all processes are precisely explained, to perfectly fitting software, to further training and management consulting. The bulk of these benefits can be a great motivator. In this video we asked Angelika what made her decide to start a franchise fashion boutique.

Disadvantages of starting a franchise

Be aware  that you will transfer a fixed portion of your sales to the head office throughout the life of your company . In addition, setting up a franchise business requires more capital at the beginning than a classic individual start-up. On the one hand, this is due to the entrance fee, and on the other hand, because you hardly have any leeway to save on the initial equipment. After all, you are obliged to implement the requirements of the franchisor.

Apart from the cost, franchise also means that you forfeit part of your entrepreneurial freedom . What you offer at what prices, how you appeal to your customers and how you bind them to your company, how you set up your shop and who you get your goods from, all of this is largely prescribed for you.

Above all, sales geniuses and people who love direct customer contact can fully contribute their skills in their own franchise company. Because they are very close to their customers every day and are relieved of many activities that they would have to do as sole proprietorships in addition to day-to-day business: Developing advertising measures, setting prices, negotiating with delivery companies, taking up current developments and further developing products Etc.

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