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Pros and cons of a franchise

On Behalf of | Mar 11, 2015 | Commercial Real Estate

Individuals in Kansas who want to run their own business may wonder whether a franchise is the right choice for them. Franchises have their advantages and disadvantages, and individuals who are considering one should carefully weigh these realities. Individuals should also keep in mind that they are licensing rights to a franchise and not purchasing a business. The franchisor still owns the business and may be able to take it away or change the agreement once a contract ends.

Franchising may be a good choice for individuals who are looking for a good deal of security and guidance. The name brand of a franchise may be an important factor in the success of a new business, and the new franchisee will also receive training and support. However, with that security comes some disadvantages. The franchisee must be willing to do things the franchisor’s way, must have a substantial sum of money to invest, must be willing to share profits with the franchisor and must keep in mind the risk that their franchise license may not be renewed in some cases.

Doing research ahead of time may minimize some of these potential disadvantages. Individuals could seek information from the International Franchise Organization, the American Association of Franchisees and Dealers and the American Franchisee Organization. They might also obtain a Franchise Disclosure Document and talk to other franchisees.

Individuals who are considering licensing franchise rights, starting a business or becoming involved in commercial development may want to seek legal advice. This can be a complex area, and an error in a contract can be costly down the line. For example, franchising contracts might vary widely. An attorney may be helpful in directing an individual toward working with a business that offers the type of guidance and freedom that fits the client’s goal.