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When Does a Franchise Business Make Sense?

Posted by Twelv31 Advisors on January 9, 2019
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When you’re looking to buy or start your own company, you have several options. You could start from scratch, building your own original business from the ground up. You could buy an existing stand-alone business someone has already built. Or, you might buy into a franchise business model (either an existing business or a new one). As with any of these options, franchise business models come with their own set of pros and cons, but sometimes they make a lot of sense for a business owner.

Some Benefits of Franchise Business Models

One of the biggest benefits of buying into an established franchise is that it’s an established business. It already has an audience and customers, and someone has worked out a lot of the kinks in the process — in short, you don’t have to reinvent the wheel. New owners in a franchise have distinct advantages over new owners of small businesses.

  1. The franchise has, hopefully, already done the work of building a brand and audience trust. That means you’re more likely to have customers as soon as you open, and you can even leverage on existing knowledge of the brand to build excitement for the opening beforehand.
  2. Franchises typically come with processes, training manuals and best practices that are already recorded; instead of chopping your own way through the wilderness of new business ownership, you get to follow a map and a path that is at least somewhat blazed.
  3. Your business is backed by the overall franchise, which means you have more leeway for growing pains than you might with a stand-alone small business. In many cases, the franchise provides for certain needs in the early days of the business, and some franchise models come with safety nets for individual businesses within the chain.

A Few Disadvantages of Franchise Models

Franchises don’t come without some disadvantages, though. The biggest issue many people have with franchises is that they aren’t 100 percent in control of their own business. You’ll have to follow franchise rules about branding, product placement and pricing, etc., which can leave you at a slight disadvantage on how you deal with customers or plan for growth.

You’re also at the mercy of the franchise to some degree when it comes to culture. Public perception is important, and you might find your brand impacted by actions someone states away took at a different franchise location.

When Does It Make Sense to Buy into a Franchise?

Weighing the pros and cons is important when buying any business, and a Twelve31 advisor can help you understand if a franchise purchase is the right entrepreneurial step for you. Franchises might make sense if:

  • You don’t have the capital or time to launch a business from the ground up
  • You’re not experienced at launching a business but do feel you would be good at running one
  • You like the idea of being part of a team, even as a business owner
  • You want a ready-made idea with an existing audience

Contact us at to start the ball rolling on your next business adventure if any of these things are true for you. You can contact Twelve31 Advisors today at 800-971-3270 or email to Hello@Twelve31Advisors.com to speak to an experienced, professional business broker.

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