What is more profitable: a franchise or buying a ready-made business? Is it worth starting a franchise business for a beginner? Is Franchise Worth It?

It is no secret that starting a business from scratch is costly and involves significant risks. According to statistics, about 50% of small businesses do not survive even two years on the market. The use of a well-known brand for start-up entrepreneurs significantly reduces risks and allows you to bypass most of the "pitfalls", which is why the direction of franchising is becoming increasingly popular. Franchising is an organization business relations for starting and running a business. The subject of such an agreement is a franchise - the right to open a business under famous brand for a fee using technology and know-how.

In this article, I will talk about whether it is worth it for a newcomer to the business world to buy a franchise business. You can also watch my video on whether it is profitable to buy a franchise now:

Franchise- the most accessible and sufficient fast method business development for start-up businessmen, requiring minimum investment. Below we will talk about the benefits of buying a well-known branded business model:

Well-established business processes. Smart people are known to learn from the mistakes of others. Asking the question: “Is it worth buying a franchise?” you need to take into account the fact that by buying a ready-made business model, you will learn about the most common mistakes that the franchisor or other franchisees have made, and you can easily get around them.
Business plan. Everything is given to you financial indicators business: approximate investments, payback period, net profit, average check. Thanks to these indicators, you will be able to analyze the course of your business and find problem areas that the franchisor will help to fix if necessary.
Brand recognition. Buying a franchise for a beginner involves using a well-known brand that has already won the trust of customers. This factor reduces advertising costs to a minimum, since well-known brands practically do not need it, and recognition will also reduce the time to profit and recoup the funds spent at the launch stage.
Training and support. A decent franchisor, along with the right to use his trademark, transfers to you all the theoretical and practical subtleties and nuances of the business. Often the transfer of these skills takes place in the form of a training program or course, which allows you to absorb information as efficiently, easily and quickly as possible.
Support. The franchisor's team provides support in all areas: you can ask your account managers if you have any questions about the business, and if necessary, the head office will provide you legal protection, help of IT-specialists to fix technical problems or designers to produce promotional items.
Quick start. By using well-established business processes transferred to you, you will be able to reduce the start-up period to a minimum: from two weeks to one month! Launch mechanisms are already known, the command management company will always come to the rescue - what else is needed for a successful start?

If you need help in selecting a profitable franchise or auditing the chosen one, please contact me, I have extensive experience in franchising, I will be happy to help!

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What problems can you face

It would seem that the answer to the question: “Is it worth buying a franchise?” obviously positive, however, it is impossible not to say about the negative aspects of this business model.

Restrictions and penalties. The activities of a franchisee entrepreneur are strictly regulated by the terms of the contract, so there is no “space for creativity” in this business. Moreover, when fixing the fact of violation of the terms of the company-owner of the brand, a strict system of fines is provided.
Lump sum. A one-time payment for joining the network and the right to work under a well-known brand. The financial factor for start-up businessmen is important, and some franchises are of great value.
Royalty payments. Regular payments for the right to use the brand. While this is an additional financial burden on the franchisee, the knowledge and technology transfer base can quickly recoup these costs.
Franchisor property. When buying a franchise, it should be understood that upon termination of the contract, a return of all commercial information transferred to you at the conclusion of the contract, since it is the property of the franchisor. You will not be able to work in this business area, although you have already studied all the nuances and technical processes. Key benefits and possible problems, which you need to familiarize yourself with before deciding whether a beginner should buy a franchise, I also recently covered in a video on my channel. I think you will be interested to read it.

Real reviews about the franchise business

Of course, in order to study the business model that interests you, you need to read the reviews of people who have already bought it, and if there is an opportunity to get to know two points of view better: current and former franchisees. Also, reviews can be found on the Internet, below I will give some of them.

Let's start with positive reviews. It's no secret that various options for organizing leisure activities for children of preschool and primary school age are now in great demand. Below is a testimonial from a franchisee who opened a franchised language school and was very satisfied:

“I will tell you my story of cooperation with a well-known brand of a language school, I will share my feedback about the franchise. In my experience, I have found that teaching foreign languages much easier for children early age. I began to look through the catalog of the most profitable franchises in Russia and saw a network of language schools. We decided to try!

Already in the first six months of work, it became clear that the methodology developed by the network's specialists gives excellent results. All teachers of my Center were approved through the head office. They know the language taught perfectly, they know how to work even with the smallest students. The training programs are designed in such a way that you can join the group at any time. The franchise paid for itself pretty quickly, I get support to run the business, new stuff comes out all the time. Once a week we meet at webinars, they are held by employees of the head office, and every year we gather for meetings - all franchisees and employees of the management company!”

Today, there are a lot of parents who want to embody their unfulfilled dreams of a big stage in their children. According to statistics, 70% of girls aged 5-7 have attended dance schools at least once. In the review below, the franchisee shares his impressions of opening a choreographic franchise school:

“I have dreamed of my own business for a very long time. But, as a girl, I wanted my business to be not only profitable, but also beautiful. For a long time I could not find my direction, such that I really liked everything, and would be able to do it. Accidentally found information about the franchise of the choreographic school. From the moment of signing the contract to the opening of the school, exactly a month has passed for me. In the materials provided to me, everything is available and written in detail. A pleasant bonus was the franchisee's chat, where we feel like one huge team and always find answers to emerging questions together. Taking into account the transferred theoretical and practical base, we were able to win a leading position among competitors, and this cannot but inspire! I didn’t regret my decision to open a choreographic franchise school for a minute!”

Foodservice franchises are very popular, due to high demand among buyers. Here, for example, the franchisee, who acquired the cafe franchise, talks about his successes:

“Why did I choose this particular franchise? I think it's a very reliable franchise - that's the first one. The second is a very rich assortment of various pastries. An experience entrepreneurial activity I have been about seven years old, all this time my activity has been related to catering. I, as an experienced technologist, studied production technologies and was satisfied.

I am very pleased with the opening of this business and the interaction with the franchisor directly. Employees of the management company answer any questions, competently advise, and there is support day and night!

Clothing franchise business is sure to be in demand. However, there are also dishonest franchisors, one of them was encountered by the author of the following review:

“I became another unfortunate customer who bought a franchise of a well-known clothing brand. The design of the store seemed interesting to me, the sales manager told everything very beautifully - and of course I believed in it. At first there were no problems, they made a design, conducted training. But as soon as I transferred the money for the purchase of the collection, problems immediately began to my great chagrin! There was no delivery of goods, they always came up with various difficulties. The delivery was delayed for a huge period, I was wasting time and losing customers. In the end, I decided to purchase collections from other suppliers myself, as I did not know how much longer it would take. I didn't guess! However, the franchisor behaved extremely dishonestly, no one returned the money, there is no support in the process of work. According to the management company, it is needed only at the time of launch. Although I coped with my difficulties, I do not recommend this franchise to anyone!”

The following franchisee had a negative experience with acquiring a foodservice franchise:

Conclusion: so is it worth starting a business under a well-known brand?

I hope this article has helped you answer the question of whether it is worth buying a franchise for a beginner, as well as understand all the intricacies and nuances of this business. Of course, this decision requires the most detailed study of all information about the company that owns the brand, analysis of competitors, and obtaining feedback from current and former franchisees. Think, study, analyze and don't be deceived!

Every entrepreneur who wants to open a business with an idea that has already proven itself in the market has a choice: to start on their own from scratch or. This choice is more difficult than it seems, because the money invested in the business is at stake. Some say that a franchise is a waste of money. Others call her the best way grow rich. We will tell you whether a franchise business is profitable and how to make the right decision.

Benefits of a Franchise

The essence of franchising brings it to the forefront: perfect cooperation between the seller and the buyer, when the first expands the business with almost no investment, and the second receives entrepreneurial experience, support and profit. The statistics are also on the side of the franchise, because most newcomers are forced to close in the first year. In franchising, this percentage is much lower. Let's figure out why it is profitable to work on a franchise:

Buying a franchise, you automatically get a promoted brand, recognizable and with a clean reputation.
The franchisor invests in advertising himself. You can save on this item of income and time to form the image of the company, win over customers - you can immediately proceed to making a stable profit.
Support and training from the franchisor - this is not what you get when starting alone. The seller can take care of the franchisee, increasing his knowledge, skills and abilities through courses, master classes, training materials, individual consultations.
Consulting. When buying a franchise, the partner will help with specific issues: providing initial information about the market segment, advice on choosing premises and personnel, and marketing consultations.
You know the amount that will be needed to run the business, everything has already been calculated for you. So you take less risk by taking on too large amounts or stumbling with too little.
Individual entrepreneurs are a dime a dozen, counterparties will not single out someone, which cannot be said about franchisors. They usually have established contacts with suppliers and have big discounts, so that you will get favorable conditions.
The franchisee shares responsibility with the franchisor. It is stress that can prevent a beginner from calmly and confidently approaching the matter. He does not feel alone in difficult business situations and therefore the franchise becomes more competitive.
Often the franchisor demarcates the territory so as not to create competition between his own franchisees. The scope of the expansion is prescribed in the contract.

When buying a franchise, the partner will help with specific issues: providing initial information about the market segment, advice on choosing premises and personnel, and marketing consultations.

As a result, the picture is rosy: a franchise is easy money. You get the opportunity to develop, immediately rising to the same level as the parent company. But in no case can one draw conclusions without learning about the shortcomings of the franchise.

Franchise Disadvantages

Franchising is not the dominant system in business, which means that it is far from ideal. The disadvantages are related to the fact that the franchisee with a business that seems to belong to him does not feel independent. And the payback of the franchise depends on many factors. You may encounter obstacles not only in developing a franchise, but also yourself as an entrepreneur.

The most banal problem of the franchisee is. The start itself - a lump sum - costs a lot. Especially if you wanted privileges, so you won’t be able to fit into franchising from scratch. Add to that a recurring royalty payment, which can be a fixed amount or a tangible percentage of profits. It turns out serious expenses, which are your responsibility to pay, even if you go broke.

Unfortunately, in Russia there is no legislation on franchising that would regulate its activities from and to, and franchisees usually suffer from this. You should take care of your own at the stage of signing the contract, asking for help from a specialist. Do not forget about the powerful legal support of the franchisor.

Another trouble that the franchisee faces is the limitation of independence on all fronts. has already developed a business development strategy and is working on it, so it will not work to get out of this framework. It is important for the franchisor that you maintain the brand image. These standards may relate to the quality of service or the choice of premises and can be very high - such that the chance of burnout becomes real. Even a sensible remark or an effective idea of an entrepreneur can be rejected only because the franchise is a well-oiled mechanism that does not tolerate deviation from the standard.

The cons of a franchise are associated with risks that depend on the choice of the parent company. Franchising has become so popular that even yesterday's newcomers sell it. Sometimes it "shoots", but more often it leads to bankruptcy of both the franchisor and all his franchisees.

Even at the stage, your task is to study the interested company, make sure that it really has a successful experience, a recognizable brand and good reputation. Moreover, the collapse of the parent company with unconvincing competence for franchising will lead to the closure of everyone who worked with it.

And, finally, another common problem: the franchisee may eventually find suppliers who are ready to work on favorable terms for him, but there is a requirement from the franchisor - to purchase only from him or his suppliers. The rules of free competition do not work.

Drawing conclusions

Of course, the conclusion is different for everyone, and it depends on the specifics of the business, the entrepreneur's expectations, and the conditions of the franchisor. It is useful to study the future partner by numbers (if you have access to them) in order to find out the effectiveness of franchising. Remember that buying a franchise is an investment. So follow the same rules. What return will the money invested in the franchise bring? What is the payback period for a franchise? Will I work better with this experience? Approach with all responsibility to making a decision, then you will get a really profitable system that works for you.

1. Is the franchise profitable?
2. Negative sides franchising
3. What is more profitable - a franchise or your own business
4. Which franchise is more profitable

Almost every aspiring entrepreneur is faced with a choice one day: start a business from scratch or work on a franchise. And this question is far from being idle, since the money and effort invested is at stake.

Is a franchise profitable?

A franchise is a special form of agreement in which an organization company (franchisor) transfers to an entrepreneur (franchisee) the right to work under its own name. However, she also allows him to use his trademarks.

Other benefits:

fast promotion of business (due to work under a well-known brand);
opportunity to get free study guides and consultations;
the ability to quickly pass the breakeven point;
low level of competition (one franchisee always works in one territory!)
no need to spend on advertising.

For comparison: an entrepreneur who opened a business himself, at first, must work for the trust of customers, so there is no need to talk about any quick promotion or quick profit. In addition, he always has many competitors.

Negative aspects of franchising

Franchising, like any other type of business, has its drawbacks. These primarily include the high cost of the starter package. Starting your own business sometimes costs less than buying a franchise.

Other cons:

the need to follow the rules of the company;
the inability to develop creatively (an entrepreneur cannot put his idea of business promotion into practice!);
the need to purchase raw materials only from those suppliers, the list of which was presented by the franchisor (they do not always have the most favorable conditions!).

In this regard, it is easier for an “independent” businessman. He can set his own rules, almost constantly change suppliers, implement any ideas. But he is also capable of acquiring large debts and problems along the way. The franchisee, on the other hand, works according to a ready-made business model, proven in practice, and can always consult with a partner, so it is easier for him to succeed.

What is more profitable - a franchise or your own business

In fact, there is no clear answer here. You need to look at your capabilities and ambitions, the region where you open a business, the field of activity, and the availability of funds. A franchise is beneficial for those entrepreneurs who have capital, but do not know how to use it properly to generate income. It will help them find their way into the world of business, start moving through it with the help of experienced "comrades" and build a highly profitable enterprise from scratch. But to all future franchisees, 2 pieces of advice can be given:

Carefully read the terms of the contract so that you do not lose money later (some companies go to different tricks to achieve the maximum restriction of the freedom of a businessman and reduce his profits in their favor).
Choose only proven franchisors (the world is arranged in such a way that you can always run into the tricks of scammers).

Open own business it is worth it only in cases where you are completely confident in the success of the enterprise, you can literally count the competitors on your fingers, since there are few of them, and you do not want anyone to command you. The latter is because the organizing company will always restrain the activity of its partner.
Deviation from the business plan is unacceptable. All questions must be agreed with the managers of the franchisor.

Which franchise is the best

Of course, the franchise is more profitable, which pays off quickly and brings maximum income. You can get acquainted with the list of popular and profitable franchises on the pages of the portal website.

Here are just a few of them:

Edem.rf is a portal franchise where drivers and passengers meet.
Eshemoda is for connoisseurs of designer bags and beautiful accessories.
AutoDiscount69 - for those who want to sell auto parts.

And many others.

Last advice: when considering the question of which franchise is more profitable for a businessman, always try not only to look at the reviews of other franchisees, but also think with your own head. After all, the business that “didn’t work” for one entrepreneur can become “golden” for another. We hope that you now know whether the franchise is beneficial specifically for you. Success and prosperity in business!

Starting your own business is a difficult and very risky process. A lot depends, first of all, on the personal qualities of a novice businessman, as well as on economic situation prevailing in the market. That is why many entrepreneurs start their activities with franchising.

What is it like and is it worth buying a franchise - let's try to figure it out, based on real experience and franchise testimonials of people who took the risk and got down to business.

What is franchising

This is a type of cooperation in which one party (franchisor) transfers the second (franchisee) the right to sell their goods and services or produce products under the franchisor's trademark.

The franchisee pays a lump-sum fee and royalties to the business owner, and he, in turn, fully controls the partner's activities, dictates his terms to him, allows him to use his technologies and developments, development, and in some cases, supplies goods for sale.

In our country, the history of franchising began only in the late 80s and early 90s with the company for the production and sale of ice cream "". Abroad, the experience of buying franchises has more than one decade. This is one of the most common types of business expansion for promising companies.

In Russia, the most successful areas in franchising are:

sale of food products;
organization of catering points;
sale of consumer goods: inexpensive brands of clothing and footwear, furniture, building materials, etc.;
provision of services: medical, legal, entertainment, etc.

Much less success and demand is franchising manufacturing companies, the development of which requires knowledge of complex technological processes, requires additional costs for materials and other production resources, as well as the availability of qualified personnel.

What are the benefits of buying a franchise

Franchising has a lot of advantages, especially for people who are taking their first steps in business.

Let's take a closer look at the main advantages of a franchise:

When buying a franchise, you do not need to worry about promoting your business - you get a ready-made brand with its own history, promoted name, and target audience.
You do not need to think about where to purchase raw materials for the production of products, what technologies to use, how to draw up a business plan, what equipment will be needed to open trading floor, medical center etc.
The franchisor is actively involved in running the business, providing consulting, marketing and training services.
You do not need to spend money on advertising - the advertising campaign is carried out by the franchisor, who is directly interested in promoting the company's products.
When buying, you pay a strictly defined amount, which is calculated in the most accurate way by economists who are well versed in business processes.
You do not need to look for partners for your business - the franchisor provides you with the opportunity to cooperate with its partners.

What Difficulties Can a Franchise Owner Expect?

Like anything else, franchising has its drawbacks. Before embarking on a free swim, you need to learn about all the pitfalls that await you on the way. Reviews about the franchise from our entrepreneurs are very contradictory, and for negative experience there are reasons too.

One of the main obstacles may be the lack of start-up capital for the down payment. Often, a lump-sum contribution is more expensive than investing in your own business. In addition, the matter is not limited to the payment of a lump-sum contribution - royalties must be paid regularly.

Another drawback that some entrepreneurs note in their reviews of the franchise follows, oddly enough, from the merits. Constant control by the business owner may limit the autonomy of the franchisee. This is due to the strict terms of the contract, requiring full compliance with all requirements for the quality of goods and services.

No matter how things are going for you, it will be impossible to go beyond the business plan. For ambitious entrepreneurs, this can be a big problem.

The reputation of your business will depend on what the franchisor has. Therefore, when choosing a company, you should try to get complete information about it before agreeing to buy a franchise or choose worldwide well-known company, such as or .

“If you have no experience in business, and life is still not enough, your pocket is empty, but ambitions do not let you sleep at night, then feel free to choose franchising. I took a chance and bought a franchise fromsubway, and six months later she opened a second point, and then several restaurants in neighboring cities.subwayperfectly helps to cope with the first difficulties, directs and very strictly controls all processes. For those who are accustomed to work and take a responsible approach to business, this is the best choice. You gain invaluable experience, and in a few months you will be able to recoup all expenses..

Franchises in the field of children's leisure, as well as sports or musical and aesthetic education, are very popular. Franchises of sports and dance clubs allow many people to realize their dreams not only about business, but also to show their creative, pedagogical and intellectual abilities.

However, there are also negative opinions. Very often this is due to the fact that people buy a franchise from companies that little is known about in the region. Because of this, it is much more difficult to attract customers; competent conduct is required. promotions, much depends on the person who owns the business:

“My friend bought goods from a very famous brand in this country abroad. She liked the quality of the clothes and the price. She decided to buy their franchise and open a store in her city. However, no one here heard anything about such a brand and, despite the good product, the support of the management company, the business did not go. Therefore, you should not get involved with unknown brands - it is better to go on the beaten track and buy a franchise from a well-known profitable company..

Any business activity is always associated with risks. When starting your own business, an entrepreneur puts a lot at stake - his capital, personal property, and in some cases, borrowed funds. That is why it is so important at the planning stage to assess the situation on the market, calculate the payback period of the project, etc.

An alternative for many entrepreneurs in the conditions of economic instability that is characteristic of the present time can be a franchise business. This format of work allows you to largely count on a business partner - a franchisor, who provides significant support and, in fact, provides a ready-made tool for doing business. However, the franchise also has back side medals” are regular deductions in favor of the owner of the trademark. To find out what it is, and in what cases a franchise business can be profitable for an entrepreneur, read on.

What is a franchise business

To consider a franchise business as one of options entrepreneurial activity, it is necessary to understand what it is.

Franchising is a format of mutually beneficial business cooperation, in which one party (the franchisor) transfers to the other (the franchisee) the right to sell goods and provide services or produce products with subsequent sale under its own brand.

At the same time, the franchisor dictates the conditions for using the brand, including the size of the initial (lump-sum) and subsequent contributions (royalties). For his part, he undertakes to provide a ready-made business system, in other words, a valid business plan. In addition, the franchisor provides the entrepreneur who has concluded an agreement with him with all kinds of support measures in the form of training, the opportunity to use an advertising campaign, etc.

This type of interaction is beneficial for both parties: the franchisor becomes more widely known and enters new markets, and the franchisee gets the opportunity to become a successful businessman, acting according to a ready-made, proven scheme.

In Russia, franchising first became known in the last decades of the last century. It is believed that the first franchise to domestic entrepreneurs was sold by Baskin Robbins in 1993.

I must say that franchising in Russia today is especially popular with representatives of small and medium-sized businesses and is developing to a greater extent in three areas:

trade;
service;
catering.

Why is franchising so popular in small businesses? The answer is quite simple: a franchise can be bought for relatively little money, and cooperation with a large company that organized the transaction allows you to gain invaluable experience in entrepreneurship. Read also what are there to choose an interesting option for yourself.

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Advantages and disadvantages of a franchise business

To understand whether a franchise business is profitable, you should consider in detail the strengths and weak sides this type of business.

The obvious advantages of the transaction for the franchisee include the following features of the franchise:

the contract indicates the exact amount that you will need at the start - you do not need to calculate it yourself, you do not risk making a mistake, the calculations were made for you the best specialists in the field of business planning;
the popularity of the trademark (name, brand) of the franchisor will provide you with a ready-made client base even in the early stages of doing business;
franchisor support: training, consulting, marketing programs and much more, because the company is directly interested in your success;
free advertising - the franchisor invests a lot cash in advertising campaigns, the result of which can be used by you as well, since you work under his name;
a ready-made scheme of actions - a business plan will allow even an entrepreneur who does not have sufficient knowledge and experience in the field of entrepreneurship to implement his project as part of a franchise;
the opportunity to cooperate on favorable terms with the partners of the franchisor - collective purchases of all the materials necessary for the production and sale of the product (goods, services) will provide solid discounts, for which individual entrepreneur if it acts independently, it is not necessary to count.

Important! As the experience of the franchise business shows, on average, the payback of such a project is achieved in 6-18 months. This is also an advantage for the franchisee, because in the current economic crisis Russian banks are more focused on short-term loans for a period of up to two or three years, rather than on long-term credit programs.

Along with the obvious advantages, the franchising business is characterized by some disadvantages.

First of all, they include constant monitoring of the work of the franchisee, one way or another limiting his independence. The activities of the entrepreneur must comply with the established standards developed and implemented by the franchisor. Majority large companies very strictly monitors the quality of customer service franchisees. This is justified by the intention to maintain the existing image and credibility of the company.

In addition, an entrepreneur will need to constantly pay for a ready-made business model (within the framework of the contract). Franchisees are initially required to pay a lump sum representing the cost of starting the franchise. Further, regular payments are to be made - royalties in the form of a percentage of profits or a specific amount indicated in the contract.

Among others, the lack of clear rules and regulations in Russian legislation governing the operation of franchising systems can be attributed to the disadvantages of a franchise business. This circumstance is one of the reasons for restraining the development of franchising relations in Russia.

For more information about all the pros and cons of a franchise business, see the following video:

Which is better - a franchise or your own business

When opening any business, you need to be guided not only by economic prerequisites. It is important to take into account the region in which the future entrepreneur is going to operate, the socio-demographic situation that is typical for this region. If you are planning to acquire a franchise of a particular company, it is advisable to evaluate the future partner for fame and trust among consumers in your area.

When thinking about the topic “franchise or own business”, you need to have an idea of \u200b\u200bin which area the activity will be carried out. Where the market is full of well-known and popular brands (clothing and footwear trade, organization fast food), it will not be easy for an entrepreneur who decides to compete with large companies.

An important role in resolving this issue is played by the businessman's own ambitions. You need to understand that when buying a franchise, you come under the close attention of the franchisor, which will largely restrain your activity. The development of an enterprise that goes beyond the business plan will simply be unacceptable.

The franchise is ideal for entrepreneurs with equity, but not representing how profitable it is to use it for profit. Investments in such a project will allow not only to find yourself in the business world, but also, with the support of an experienced partner, to build a successful enterprise that brings high income.