Starting a small business involves so many complicated moving parts. I enjoy mentoring newcomers to the world of entrepreneurialism and helping them navigate their new ventures. When someone in my circle asks for advice on starting a business, they’re usually asking themselves “Should I buy a franchise or strike out on my own?” In most cases, I prod their thinking by presenting them with the standard “pros and cons” spiel, and encourage them to make their own cost-benefit analysis of each franchise they’re considering. In the end, however, I suggest that if they’re looking for a more user-friendly business model with a fairly low barrier to entry, a franchise might be their best option.
Are You Wondering “Should I Buy a Franchise?”
I’m always happy to share that, when it comes to starting a business, the benefits of not going it alone are plentiful. Here are a few of the main positives I like to share:
- A franchise requires a lot less effort to get off the ground. Compared to starting your own business from scratch, a franchise requires a lot less creativity and innovation to get off the ground. You don’t have to reinvent the wheel in order to structure a functioning business—you just have to implement a system that already exists.
- Established marketing, branding, and networking tools are a godsend. Especially for first-timers who are new to the small business lifestyle, it’s such a relief to be handed a marketing and branding package right off the bat. It would take years to develop that kind of visibility and brand recognition in your local area, and these tools can help you reach your goals a lot faster.
- You have a greater chance of reaching success with a franchise. Starting any business is a bit of a gamble, but when you buy a franchise you’re purchasing a system that works. Your product, service, or brand has already been proven to be successful by hundreds, even thousands, of franchisees across the nation. In a sense, you get to ride their coattails.
- Training and support resources make the challenging times easier. The best franchise opportunities pair you up with extensive training resources, mentorship opportunities, and support tools that make navigating a small business much easier. If you need help, you always know who to ask and where to go.
Because of these benefits, and a whole host of other factors, becoming a franchisee is an incredibly attractive option for many people, however, buying a franchise is not a foolproof, 100% success-guaranteed venture. You do have the potential to grow an incredible business using a proven system but you should be operating on the assumption that, despite some prevailing business myths, franchises are just as likely to fail as other business types if you do not work the system provided. This is not meant to discourage you from investing in a really promising franchise opportunity, it’s merely a caution to take this decision as seriously as you would any other major investment.
Aside from that reality check, the main drawback to opening a franchise is financial in nature. Traditional franchises—especially fast food restaurants—are notorious for having incredibly steep startup costs and franchise fees. Ongoing costs after opening can also be monumental, so be aware that you may have additional monthly costs associated with raw supplies, location, and payroll bills.
If you do happen to buy a franchise at a low initial cost, it’s best to have plenty of cash on hand to cover business and personal expenses for at least a year. Whether you plan to apply for financing or will be launching a business straight from your bank account, you want to be covered long enough for your franchise to begin turning a profit. This can be a “con” for individuals who don’t have adequate savings or who don’t want to dip into retirement funds, but those “just in case” funds will really smooth the transition.
If You Want to Buy a Franchise, These Are Your Best Bets
If these pros and cons have only strengthened your desire to own your own franchise, it’s time to consider prudent next steps. Before making any big decisions, I urge you to do your research and learn as much as possible about the legal and financial ins and outs of owning a franchise. The FTC has a fantastic beginner’s guide to franchising that I always recommend as an initial resource, and it’s also a good idea to reach out to plenty of existing franchisees in your industry to discuss challenges, insights, and advice.
As for choosing a franchise, I recommend taking an honest look at your personality profile, strengths, and experience before selecting a business that’s right for you. From there, you’ll want to choose a relatively-affordable franchise that has a proven track record of success in your area or on a nationwide scale. And, as a professional real estate investor myself, I always point prospective franchisees to check out HomeVestors®.
Buying a High-Quality Real Estate Investing Franchise
If you want to be your own boss and you have a strong work ethic, an independently owned and operated HomeVestors® franchise is a highly attractive option to consider. Associate franchises start at $34,000—less than one-fifth the cost of opening a nationally-known pizza restaurant— and you can grow your real estate investing business part-time or full-time. You’ll find that HomeVestors’ “We Buy Ugly Houses®” national brand and marketing tools for investors make short work of generating qualified investment property leads. One of the best benefits, however, is that you will have an experienced and dedicated Development Agent on your side to help you grow your business, significantly decreasing the risk of investing in real estate—with or without a franchise.
Together, HomeVestors® franchisees have bought over 100,000 houses nationwide since 1996. If you’re interested in joining the ranks and jumping into a promising franchise opportunity, contact HomeVestors to learn more.
Each franchise office is independently owned and operated.