11/28/2005

The Downside to Franchising

For many of us our time here at SUU will be drawing to an end fairly soon. As students of business we have a few different options one of which includes being an entrepreneur. For those of you thinking about taking this route you may be interested in this article on franchising. There are a few perks to franchising, but for the most part it is a rough road to travel. As a franchisee you get all the financial exposure, headaches and stress of business ownership, but the company that has sold you the franchise collects royalties on every nickel that comes through the door, not to mention charging fees for marketing, and other fees to recoup some of the company’s overall costs, some of which offer no benefit to your individual store. The franchisor usually dictates virtually every detail of what you can do, including how you price your wares, what kinds of signs you can put up, how much overtime you may pay your employees, and who will be your suppliers. My suggestion to you is find a way to make money doing the thing you love most and start your own business from scratch. For those of you who find making out or sitting on the couch eating potato chips as your favorite thing to do I suggest reverting to the second thing you love to do most. :)

6 comments:

Morgan said...

I agree with you. While franchising may be the way to go for some people, I personally would not go that route. If I am going to take the time, energy, and resources, etc. necessary to engage in a business, I want to have as much freedom and flexibility as possible. I want to play by my own rules, and I want to be the one in control, ultimately deciding my own destiny, and state of my business.

Chloe said...

I agree that franchising can be a rough road, and at times be frustrating. However, I have had some experience working with a franchise, and though the company does collect royalties and have rules and regulations you must abide by, it can also be a fun and exciting road to take. Franchising is not for everyone, but it is still possible to make it work and enjoy it.

Tyler said...

Personally I believe that taking orders and following a strict business plan set forth by the management would be a difficult thing to follow. I would want something that I put the majority of my time and money into to result in something that I built that way that I wanted to, hopefully making it successful. So basically I agree with you, franchising has more than enough drawbacks.

Bree said...

Entering into the business world just out of college is going to be difficult. Most of us have taken all the right classes but none of us really have a clue on how to run a business. There may be an upside to owning a franchise in the fact that they do tell you how to run it, what to charge, and how much to pay your employees. Most businesses that even offer a franchise normally do well so I don't see how it could really be a bad way to get your foot in the door. You can always sell the franchise and then start up your own business after getting some well-needed experience. But that's just my way of looking at it.

Savannah said...

I know some people who have gone down that road and they are now trying to back out. Most of them got stuck with poor locations, barely making enough to keep their heads above water. After seeing what they have gone through, I don’t think buying a franchise is a good idea.

Dr. Tufte said...

I think you all missed the big picture here - there are tradeoffs involved in franchising.

Those tradeoffs will cause us to divide up on whether or not franchising is the way to go.

But, having said that, the fact that we do divide up on that means that the tradeoffs are balanced properly.