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Many dream of becoming their own boss but are hesitant to make the leap because of the potential risks. I had that same hesitancy when I was considering leaving my full-time job to become a real estate investor. Needless to say, I’m glad I didn’t allow fear to get the best of me.  

Making a career switch and starting a business of your own is an adventure in itself, especially when evaluating the potential financial risks, competitors, chances of failure, and other unknowns. For those who find building a business from the ground up intimidating, buying a franchise could be a better cushion against the risks, especially when joining an already successful brand. 

If you’re looking to buy a franchise, let’s discuss some of the potential advantages and disadvantages, and the type of franchise you should consider.   

buy a franchise advantages and disadvantages

Buying a Franchise: The Advantages and Disadvantages

Your decision to buy a franchise can prove to be a good move or a bad one depending upon how you look at the advantages and disadvantages. 

The Advantages of Buying a Franchise 

Brand Recognition

For a new business, creating a name for itself and winning the trust of customers could take years. One of the biggest advantages of buying a franchise is receiving instant recognition from customers who identify with the brand. With the recognized branding and trademarks, and products or services in place, all you need to work on is replicating the proven business model. 

Training

Training is an important part of the franchise business. These training programs ensure that new franchisees can represent the brands as per specified guidelines. Once you buy a franchise, you are provided with the necessary initial training to understand day-to-day operations, software training, and proprietary tools to replicate the business model. Ongoing training programs are also offered by franchisors to update their networks about any changes in business operations.

Marketing and Advertising

Marketing and advertising take a chunk of time and the initial investment of setting up a new business. Being a part of a franchise network saves you from the hassles of creating a brand and promoting your business as franchisees themselves advertise their brands through nationwide campaigns over billboards, radio, TV, and online ads.   

When it comes to starting a business, the advantages of buying a franchise can set you ahead of the competition and give you greater peace of mind. But these advantages don’t guarantee you instant success. When looking to buy a franchise, you must also take into account the disadvantages.

The Potential Disadvantages of Buying a Franchise

High Initial Investment

When you are buying a franchise, you will likely need to shell out an initial investment towards setting up a franchisee store and buying equipment. For some franchise types such as hardware, the initial investment could be upwards of $1 million. Also, you will need to pay franchise fees and keep liquid cash aside to qualify. That may be putting quite a lot of money at stake that might deter you from buying a franchise in the first place.         

Ongoing Royalty Fees

As if the high initial investment towards setting up a franchise business isn’t enough, you have to pay ongoing royalty fees for using the brand name and the business model. These royalty payments can prove to be costly, especially when you are just starting out.  

Necessary Experience

Though franchisors offer training programs, having some prior knowledge and experience of the industry helps you get going. This is particularly true for franchises such as business consulting services where prior industry knowledge helps to win a client’s confidence. If you are lacking the necessary knowledge, you may need to hire experienced professionals and that would add to your investment costs.   

Hopefully my discussion of the advantages and disadvantages of buying a franchise help you narrow down your choices for the type of franchise into which you should invest. I wish I’d had someone break it down so plainly for me when I was starting out. 

Factors to Consider When Determining the Type of Franchise to Buy 

Once you’ve taken into consideration the advantages and disadvantages of buying a franchise, the next thing you should do is choose which type. There are many types of franchises out there—from restaurants to real estate investment firms—it’s up to you to choose the right fit for you. Here are a few factors I’d recommend taking into account:  

  • Initial investment: An affordable, low-cost franchise with fewer up-front costs offers you the flexibility to start small while making a switch from a steady career and gradually grow into a full-time franchise. 
  • Setup and equipment: Setting up a franchise store requires the necessary startup equipment that contributes to additional costs. A franchise that demands minimal equipment including just a phone and a laptop with the option to work from your home office can help keep your budget slim while saving you from the hassle of setting up a brick-and-mortar office or store.  
  • Demand: How much demand is there for the products or services that a franchise offers? While looking to buy a franchise, you need to study how the business model can adapt to and weather any market condition and generate demand even during a recession. You would like to invest in a franchise that can survive and thrive through the ups and downs of the economy while generating steady demand. 
  • Experience: Are you confident in buying a franchise even if you don’t have the required industry knowledge and experience? How intensive is the franchisee training that will help you understand the ins and outs of the business and survive the competition? Are there any new franchisees like you who joined the network with no prior experience and succeeded with the training provided? These are all questions you should ask during your search. 
  • Ongoing training and support: As someone new to a franchise network, you need more than the initial training programs that most franchises offer. Intensive training for a limited duration can equip you with the necessary knowledge but to truly succeed in your business, you will need ongoing training and support from the experienced franchisees in the network.    

A franchise offering all of these benefits can help with a smoother transition to your new role as an entrepreneur. Now that I’ve given you a general look at things to consider when buying a franchise, let me walk you through how buying a real estate investing franchise can prove to be the right fit for you.    

The Right Franchise to Meet Your Financial Goals

Buying a real estate investing franchise can provide you with growth opportunities irrespective of the economic weather. As a recession-proof franchise, real estate investing offers you opportunities to rehab distressed properties in ailing neighborhoods and contribute to the local economy even during an economic slowdown. Unlike other franchises, you can start working remotely from your home office with just a laptop and a phone connection. Also, you can start part-time as an associate franchise with an initial fee of $32,000 and fewer upfront costs. 

These were some of the reasons why I chose to join the nationwide network of independently owned and operated Homevestors® franchisees while making the switch from my corporate career two decades ago.  

Becoming a HomeVestors® franchisee helped me get going from day one with comprehensive weeklong training on real estate investing. Being a new franchisee with no prior experience in the real estate market, this training proved crucial for me to learn the ropes including evaluating the ROI of property, financial deals, understanding the buying process, and planning the exit strategies. The best part about the training program is that it goes beyond the classroom with ongoing support provided by a seasoned mentor who can be there when you need help to close deals confidently. Further, the nationally-known and trusted “We Buy Ugly Houses®” campaign, along with the proprietary tools, ensures that you are adequately equipped to work on the end-to-end sales process with a steady pipeline of qualified leads.   

The resources and ongoing support from the Homevestors® team helps ease the mind when looking to buy a franchise. If you are interested in running a real estate investing franchise, request information from HomeVestors® today!     

 

Each franchise office is independently owned and operated.      

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