Considering franchising? Explore and understand the pros and cons of franchising, so you can make an informed investment decision.
Pros and Cons of Franchising: The Pros
Franchise Business Review posted an article on the advantages and disadvantages of franchising which is a great reference point. However, depending on what you want from a business, you may find that your list of pros and cons in franchising is a little different. Let’s look at some key advantages:
Experience: Franchises provide a proven model that includes all the aspects of operating a business. This allows people to become entrepreneurs without having previous industry experience or even business ownership experience.
- Customer base: Franchises are established brands. When you invest in a franchise, you’re gaining a loyal customer base right from the start. Franchisors put a lot of time and resources into branding campaigns to ensure their locations are recognized by the public. This eliminates a lot of the heavy lifting franchisees need to do in order to get their new business known.
- Buying power: A significant advantage of franchise ownership is that while each franchise is independently owned and operated, each franchisee benefits from the collective purchasing power of the network. Also, franchisors have partnerships with vendors and suppliers, which can help their franchisees get the best deals on equipment and inventory.
- The network: One of the key benefits of franchise ownership is belonging to a network of your peers who are not competitors to your specific operation. You can share ideas and strategies that can help grow your business without concern for someone stealing any of your customers.
Pros and Cons of Franchising: The Cons
Here are some of the factors that can be considered disadvantages when it comes to franchise ownership. Again, this depends significantly on your preference for how you want to start, operate, and grow:
Initial investment: In a franchise, you pay an initial investment that covers every expense to get open and operating. And while those costs – especially the initial franchise fee – may seem steeper than if you were to open your business on your own, at least you have a firm investment range to plan for. If you opt to open your business independently, you may run into unexpected expenses that put you over budget.
Limited creativity: A franchise has a model that works and your job as a franchise owner is to follow that model, not to change it up. You can always bring forward suggestions to the franchisor, but your commitment is to follow the model as provided. If you consider yourself more of a “free spirit” who is willing to think outside of the box, franchising may not be the best option for you.
Shared financial details: Part of your responsibility as a franchisee is regular reporting and sharing your financial information with the franchisor. However, if your franchisor has an Item 19 in their franchise disclosure document (FDD), you can also benefit from the shared financial information of everyone else in the system, which can help you gauge how well your business is performing.
Invest with Lightspeed Restoration
Why franchise with Lightspeed Restoration? We have the backing of an $18 billion parent company, Home Franchise Concepts. Plus, the restoration industry is significant, registering as an $80 billion market in the U.S. in 2022. With 100,000+ workers in the industry, there is a strong foundation for a new franchise to establish.
Fiscally, the market for restoration services is consistent, regardless of the economic fluctuations that can take place. Some of the facts from Gintux include:
- 14,000 water emergency calls are made every day in the U.S.
- About 37% of U.S. homeowners have faced a water damage emergency
- 98% of basements in the U.S. will suffer from water damage in their lifetime
- Fire damage restoration services make up about 35% of industry revenue in the nation.
To learn more about owning a restoration franchise with Lightspeed Restoration, request information today, and one of our representatives franchise advisors will contact you soon to learn moare.