To Franchise or Not to Franchise
For many entrepreneurs, the decision to open a franchise is a difficult one. While buying in to an established business concept offers several advantages, it also has some hefty financial drawbacks. 415 Group Partner Richard Craig shares his insight:
“Before committing to a franchise, find out where you’ll get the most bang for your buck. What do you really get in return for your franchise fees? Buying power and national advertising are certainly beneficial.
But the one thing that I see missing in a lot of franchises — especially the smaller ones that you don’t see on TV — is benchmarking. For example, McDonald’s has one of the best benchmarking systems out there. As an owner, you receive reports throughout the year that show how your location performs compared to others in your geographic region based on your size and revenue. That information is critical. Our firm has access to several franchise databases, so we can create internal benchmarking reports for our clients to track and measure efficiency and profitability.
Ultimately, the benefits of franchising may depend on your personal experience as a business owner. If you’re new to the game, a franchise may make your life easier by providing you with processes and procedures for day-to-day management. But seasoned business owners may not need that guidance, so they should carefully weigh the added expense of start-up costs and perpetual royalty fees.
At 415 Group, we have experience working with a variety of franchises, whether it’s a restaurant chain, in-home service provider or retail store. We’ll help you evaluate your options and determine the best financial course for your business.”