Thinking of buying a franchise? Here are the pros and cons

  • Tim Neary | November 29, 2019
Pros and cons of buying a franchise

Buying a franchise can be a viable alternative to starting your own business. Business Queensland has put together this list of the pros and cons of buying a franchise. 

Pros

Franchises offer the best of both worlds: the independence of small business ownership and the support of a big business network.

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You don't need a lot of business experience to run a franchise, as franchisors usually provide the training needed to operate their business model.

Franchises have a higher rate of success than start-up businesses.

It is sometimes easier to secure finance for a franchise. And, it may cost less to buy a franchise than start a business. 

Franchises often have an established reputation and image, proven management and work practices, access to national advertising and ongoing support.

Cons

Franchising can be restrictive as it means entering into a formal agreement with your franchisor.

Franchise agreements dictate how you run the business, so there may be little room for creativity.

There are usually additional restrictions on where you operate, the products you sell and the suppliers you use.

Bad performances by other franchisees may affect your franchise's reputation.

Buying a franchise means ongoing sharing of profit with the franchisor.

It can have an additional layer of risk as franchisors do not have to renew an agreement at the end of the franchise term.

Franchising is no guarantee of success and the same principles of good management apply.

You may have to develop the franchise brand and market in your designated area. 

Ongoing healthy returns and a capital gain when you sell are not guaranteed.

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