Overview

This essay sheds light on the top reasons why you should never invest in opening a franchise business and also elucidates the advantages and disadvantages of being a franchisee. Moreover, how to make the money in order to afford to buy your own franchise business is delineated in this essay. There are ample reasons as to why you should desist from ever investing in opening a franchise business that go beyond incurring enormous high-start up costs and lacking any modicum of creative control over your franchise business as a franchisee. First and foremost, franchisers are typically not transparent about the actual earnings of their franchisees. When franchisers supply earnings possibilities, they have a proclivity to provide average sales figures and profits before expenses are deducted ( Want to buy, n.d.). This is problematic when determining if procuring a franchise business warrants the investment since profitability is greatly overestimated when all the business expenses are taken into account. A diligent investor and prospective franchise owner must take all the business operating expenses into account in order to ascertain if opening a franchise business warrants the investment. Investors should not be solely reliant upon the questionable reported earnings provided to them by the franchiser when it comes to determining if the investment in opening a franchise business warrants the opportunity cost. Second, another deterrent appertaining to investing in opening a franchise business, beyond its enigmatic profitability, is that you will have to pay royalty payments to the franchiser in perpetuity each month as a franchisee which further abates your earnings potential. These royalty payments will severely undermine the profitability of your franchise business since they are based on a percentage of the sales ( Want to buy, n.d.). Third, another calamitous issue with investing in opening a franchise business beyond having to pay royalty payments in perpetuity each month is that you are mandated to buy products from the suppliers of the franchiser's choice. This culminates in paying egregiously inflated prices for products and greatly amplifies the costs of goods sold. Moreover, almost all franchiser receive kickbacks from the vendors. By not allowing you to shop around, you are mandated to pay much higher prices for supplies ( Want to buy, n.d.). This will further undermine the profitability of your franchise business and will cause your profitability to further erode if your designated supplier further amplifies their product prices. Fourth, another dire issue when investing in opening a franchise business is lack of creative control that the franchisee succumbs to over the franchise business down to the minutiae. In other words, without the approval of the franchiser, you cannot even make minor changes to your franchise business that would streamline its daily business operations and increase its overall profitability. Attaining approval for implementing fruitful changes to the franchise business can be an eminently time consuming and cumbersome process fraught with going through layers of bureaucracy for even simple changes to be approved by the franchiser. Most franchisers impose price, appearance, and design standards, limiting the ways you can operate the franchise. While these standards can help promote uniformity, they can also vastly stifle your creativity and ability to cater to local tastes or needs ( Want to buy, n.d.) of customers. In spite of how many operational inefficiencies you can identify within the franchiser's business model, you will be barred from remedying them by implemented beneficial changing to your franchise business without first attaining the franchiser's approval. You also will be not be able to introduce new and innovative products as part of your product offerings without first attaining the approval of corporate.

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