Is It A Wise Decision To Buy A Franchise Business?
For some people, one of the best business startup ideas is taking a new franchise as a business solution. However, this is just an overall picture because the reality is far more different. In reality, a franchise business involves a lot which must be known to the franchise so that they can be sure about their business plans.
Huge startup cost
Without a doubt, the startup franchise fee isn’t too low, because, in order to buy a franchise license from the franchisor, you need to pay a certain amount of fee. And this agreement lasts for a certain period like 20 to 30 years and hence, after that, you again need to pay some amount to renew the agreement.
Royalties are tedious
Apart from the initial cost that you need to pay as a franchise, you also need to consider the royalties that you have to pay on a periodic basis to the franchisor. This is paid in the form of a flat percentage either on the profit or on the turnover.
High costs of the raw materials
The raw material costs can be quite high, especially when you have just started the business. This is another reason why you need to ensure that you have enough stored in your saving to support the lofty costs of the raw materials.
Non-availability of finances
There is no one behind the franchisee who would support the business and will give financial help in order to pay off the initial surcharges. So, practically, a franchise is on his own during the initial days of the business.
No control over the territory
No one will have control over the territory. Opening five KFC restaurants within six or seven-mile area will benefit the franchisor but will cost the franchise a huge amount.
Conclusion
Concluding we can say that even though franchises are a better option than a start-up business, one needs to have enough bank balance to meet the high costs.
