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Pros and Cons of a Franchise Business

Advantages and disadvantages of opening a new business in franchising.

 

Investing in a franchising business is a strategic choice for many entrepreneurs, as it allows them to start a business by taking advantage of the support and reputation of a brand that’s already established in the market. However, before making this decision, it’s important to analyse both the advantages and potential disadvantages associated with this business formula. Being aware of the pros and cons of franchising in advance means you can make a more informed choice, ensuring your chosen business model truly aligns with your needs and long-term goals.

If the advantages of this business model meet your growth objectives, it can represent a unique opportunity to start a successful business, accelerate expansion and consolidate your presence in the market. According to data reported by Apps that deliver, a new franchise is inaugurated every 8 minutes, a clear sign of the growing popularity of this business formula. In this guide we will look at the advantages and disadvantages of franchising to help you understand whether this is the right choice for your business aspirations and offers the growth opportunities you’re looking for.

Point 1. According to Technavio, the global franchising market will exceed $1.9 trillion in the next four years, registering a growth rate of over 10%.

Point 2. The digitalisation of in-store sales methods by franchisees will drive future market growth.

Opening a Franchise: Advantages and Disadvantages

Franchising is one of most popular business formulas for people who want to start a business with the support of an already established brand. However, like any business model, it is important to evaluate each aspect carefully as it can significantly influence the sustainability of your business in your chosen market.

The advantages of franchising

This business development formula combines management independence with the support of a brand that’s already established in the marketplace. From reducing risks to the opportunity to exploit proven strategies, here are the main advantages:

 

  • Low business risks. One of the main advantages of franchising is the reduced entrepreneurial risk. Because it is based on a business model that has already been tested, new partners can access a formula that has already proven its effectiveness in different markets and geographical contexts. This significantly reduces the uncertainties related to starting a business from scratch offering a greater chance of achieving your business development goals right away. In addition, some companies allow their franchise partners to take over an already established business: a unique opportunity for those who want to enter the market more quickly.

 

  • Proven development model. Affiliates have access to a development model that provides them with all the systems and know-how needed to start and run their business. This means that the operational processes, marketing strategies and sales techniques have already been perfected by the parent company, which offers franchise partners clear guidance on how to manage their new business. In addition, major brands provide their partners with financial and tax benefits that allow them to run their business more efficiently, reducing operating costs and optimising available resources. This ensures more sustainable growth and greater profitability in the long term.

 

  • Centralised marketing campaigns. Another advantage of franchising is the centralised management of marketing campaigns by the parent company. This relieves the franchisee from the burden of planning and managing their own promotional initiatives, allowing them to benefit from the results produced by marketing strategies undertaken on a national and international scale. As a result, the brand achieves greater visibility and marketing costs are distributed among all franchisees, making campaigns more effective and accessible. Some brands also offer partners strategic support, ranging from analysis of the local commercial area and target market to interior design and brand identity consultancy.

 

  • Continuous support and training. Another major advantage of franchising is the training and ongoing support provided by the parent company. This includes not just the help given during the start-up phase, but also ongoing support throughout the duration of the partnership. Affiliates have access to training courses, updates on industry best practice and operational support, ensuring that they are always aligned with the latest market trends and can face and overcome the daily challenges of business management.

 

The Cons

Franchising also has some aspects that can represent challenges for anyone starting their own business. Understanding them is essential to evaluate whether this formula of commercial development is really the best choice for you.

  • Predefined procedures. Franchising implies the need to comply with procedures and guidelines established by the parent company, as each process must follow established standards that are necessary to ensure brand recognition on an international scale and offer a quality service to customers. Although this guarantees the consistency and reliability of the brand, it could be limiting for someone who wants to assume all the risk and try to bring innovation or customisation to their business that’s more in line with their own ​​development ideas.

 

  • Payment of royalties. Most franchising contracts provide for the payment of royalties to the parent company, which represent a percentage of the turnover or profit generated. Although these royalties finance the support and services offered by the franchisor, they must be carefully considered in the calculation of operating costs. On the plus side, it’s important to remember that royalties allow affiliates to access resources that are crucial to the success of their business, helping to support the brand’s growth and competitiveness in the marketplace.

 

  • Less autonomy and flexibility. Franchising involves less autonomy and flexibility in the operational management of the business. Strategic decisions, corporate policies and marketing campaigns are generally established by the parent company, leaving the franchisee less room to make independent decisions. This can be a limitation for entrepreneurs who want to have complete control over their business by quickly adapting the strategy according to their personal intuitions. However, following already proven processes offers the partner the security of operating within a system that has already proven its effectiveness, reducing the risks associated with untested business choices.

After considering the pros and cons of franchising, it is important to choose a partner that offers a solid balance between support and management autonomy. Investing in a franchise with Mail Boxes Etc. means accessing a consolidated business model with over 30 years of experience and a thriving brand, active in more than 40 countries around the world.

Our business model is designed to support entrepreneurs who want to become the point of reference for SMEs and private customers in strategic sectors such as e-commerce, logistics and shipping. Opening an MBE centre offers you the opportunity to be part of a global network that will support you as you start and manage your own business. MBE will also provide you with all the help you need going forward, offering marketing techniques and tools designed to expand and consolidate your business.

Open a new MBE Center

Mail Boxes Etc./MBE Centers are operated by independent operators as franchisees, who operate under a franchise agreement under the brand name of MBE. Through its franchise network Mail Boxes Etc. provides support services for businesses and individuals. Logistics and shipping services represent the main services of MBE – enabled by MBE through contractual agreements concluded for the benefit of its franchisees with the main domestic and international express couriers - and other graphics and printing services - provided either directly or on the basis of agreements with large printing centers. The promotion of services for business and private customers is carried out in the framework of the business activity of each MBE franchise partner within and outside of the MBE Centers ("farming"). Each franchise partner is contractually obligated to perform such activities. Mail Boxes Etc. and MBE are registered trademarks used with permission of Fortidia - a registered trademark of MBE Worldwide S.p.A - (All Rights Reserved). The services offered by the individual MBE Centers can vary depending upon the location. The material available on this Internet site, the information contained herein and any other relevant related data may not in any manner be copied, distributed, changed, republished, reproduced, downloaded or forwarded to third parties, without the expressed prior written authorization of Sistema Italia 93 S.r.l. We accept no responsibility with regard to the unauthorized use of the material available on this Internet site, the information and/or the data contained herein.