Is It A Wise Decision To Buy A Franchise Business?
• For some people, one of the best business startup ideas is taking a new franchise as a business solution. However, this is just an overall picture because the reality is far more different. • In reality, a franchise business involves a lot which must be known to the franchise so that they can be sure about their business plans.
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Huge startup cost • Without a doubt, the startup franchise fee isn’t too low, because, in order to buy a franchise license from the franchisor, you need to pay a certain amount of fee. • And this agreement lasts for a certain period like 20 to 30 years and hence, after that, you again need to pay some amount to renew the agreement. Royalties are tedious • Apart from the initial cost that you need to pay as a franchise, you also need to consider the royalties that you have to pay on a periodic basis to the franchisor. • This is paid in the form of a flat percentage either on the profit or on the turnover. High costs of the raw materials • The raw material costs can be quite high, especially when you have just started the business. • This is another reason why you need to ensure that you have enough stored in your saving to support the lofty costs of the raw materials. Non-availability of finances • There is no one behind the franchisee who would support the business and will give financial help in order to pay off the initial surcharges. • So, practically, a franchise is on his own during the initial days of the business. No control over the territory • No one will have control over the territory. • Opening five KFC restaurants within six or seven-mile area will benefit the franchisor but will cost the franchise a huge amount.
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Conclusion Concluding we can say that even though franchises are a better option than a start-up business, one needs to have enough bank balance to meet the high costs.
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