April 14, 2011 | by Christopher Brown
Pros and cons of franchising

Most people believe that owning a franchise is an opportunity to be your own boss and take control of your future.

In many ways franchising does allow you to control your destiny and invest in yourself but it also requires you to play by someone else’s rules. If you are an entrepreneur at heart, you might feel restricted by a franchise system. In reality, franchising is a hybrid of business ownership and employment. You own the business but you must operate it according to a pre-determined plan that offers little flexibility.

What makes a franchised brand attractive to consumers is consistency, knowing that the product and the level of service will be the same in every outpost of the business. This consistency requires that each franchisee tow the line when it comes to the customer experience.

And failing to follow procedures established by the franchisor can have harsh legal consequences that can lead to losing your business and your investment. Before you consider buying a franchise, determine if you have a personality that allows you to give up control of the process and focus on providing a great customer experience.

Buying a franchise gives you a head start. You receive a proven and branded concept, valuable training, a step-by-step operations manual and help designing and constructing your location. After you open you may have access to professional marketing tools, advertising materials, reduced costs for raw materials through cooperative buying and most importantly, an experienced business partner that can help you through the ups and downs of establishing a new business. However, in return for this, you give up a lot.

Financially you will most likely pay a hefty initial fee and pledge to give the franchisor a percentage of your income each week. You will lose the ability to introduce new products, drive marketing decisions or even alter the look and feel of your shop. You might compete for customers with other franchisees and lose the ability to differentiate your business from your competitors.

That is not to suggest that there is no room for an entrepreneurial spirit. One way that you can show your flair for business is by exceeding expectations when it comes to customer service or your ability to motivate and retain quality employees. Your role as a franchisee is to execute the predetermined plan with aplomb and provide your customers with a positive experience that keeps them coming back for more — again and again.

Finally, realize that the franchise relationship is governed by a detailed and often inflexible contract between the franchisor and the franchisee. There are mandated disclosures that a franchisor must make to all potential franchisees that help you understand the contract and all of your obligations.

It is always a good idea to work with a qualified lawyer and accountant when evaluating any franchise opportunity because once you sign on the dotted line, your ability to succeed will, in part, depend on your ability to play by the rules outlined in that agreement.

If you are not afraid of hard work, like empowering others and reaping the fruits of your labor, franchising could be the right fit for you.  In fact, many franchisors are looking for owners just like you. For a list of franchised concepts that value diversity in their franchisee ranks go to gayfranchise.com and explore the opportunities that might just define success for your future.

(This informational article does not constitute legal advice nor does it create an attorney-client relationship.)

Chris Brown is senior counsel with Ackerman-Legal in D.C. specializing in complex commercial litigation, small-business issues, franchise law and real estate disputes.  Reach him via ackerman-legal.com.

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