The Benefits and Drawbacks of Franchising a Business

Franchising is one of the most popular business models in the country today. Back in 2020, there were around 753,700 franchise establishments in the US. With 7.5 million people under their employ, the industry had an output of 670 billion US dollars.

With tons of success stories out there, franchising seems like an attractive option, and it is. However, every business decision requires careful consideration. 

In this post, we'll explore the pros and cons of franchising. Hopefully, this will help you decide whether it's the right business model for you.

What Is a Franchise?

A franchise is a business model between a franchisor and franchisee. The franchisor establishes the business model and its corresponding trademarks. They then sell to franchisees, who pay fees to run a business under the franchisor's system.

This model is a popular way for entrepreneurs to set up business operations. It's accessible and a lot simpler than coming up with an original business idea and making it work. 

How much do franchise owners make? An exact number can be difficult to pinpoint, as the numbers vary. Franchise owners can earn less than $50,000 to over $200,000 a year. This figure depends on various factors, such as how the franchisee runs the business.

Benefits of Franchising

If you're considering getting a franchise, you might have already seen its benefits. When done right, running a franchise can give you significant rewards. Here are a few franchising perks that might convince you to make the jump.

Established Business Plan

Building a business from scratch involves significant risk and hard work. And even then, these would not guarantee success. One of the main benefits of a franchise is benefiting from an established business model.

As a franchisee, you don't need to go through the struggles of starting out. You don't need to experiment with different strategies and take risks. The franchisor already has a tried-and-tested system, which you need only to follow.

Brand Recognition

You get the brand’s reputation when you join a franchise. This can be helpful, as you will automatically benefit from the customer base the brand has established.

As a franchisee, you likely won't have to work as hard to prove the quality of your products or services. This is especially true if you bought a well-known franchise.

Community Support 

If you're new to a franchise, you don't have to deal with your struggles alone. You will have access to a community of fellow entrepreneurs doing the same things as you are. You can ask fellow franchisees for tips and advice on how to run your business successfully.

Franchisors also provide franchisees with regular training, promotions, marketing materials, etc. If you choose to run a franchise business, you'll have a support system you can rely on consistently. 

Drawbacks of Franchising

As with any business, running a franchise is not all rainbows and butterflies. It has its ups and downs and might not be a suitable business model for everyone. Here are some of the disadvantages of franchising a business.


Along with an established business model comes the drawback of company restrictions. Since you will be buying into an existing business, you must follow specific rules. 

The franchisor may have a list of standards that each franchisee must follow. These exist to ensure consistency among branches and to maintain their brand identity. If you aren't comfortable with such a setup, franchising might not be for you.


The initial costs for joining a franchise can be high, especially when it's a well-known brand. Lesser-known franchises can have lower costs so they might be an attractive option.

Aside from your initial investment, most franchises also have ongoing costs. These can take the form of royalty fees, advertising costs, and training fees. It is at your discretion to weigh whether the benefits of running a specific franchise outweigh its costs.

Reputation Management

Being tied to a more prominent brand might draw in more customers, but it can also have the opposite effect. No matter how well you perform, controversies may still affect you.

If the management or another franchisee gets bad publicity, you might also deal with the repercussions. Their reputation is your reputation. Any scandal that affects one franchise can affect the rest of the business.

Like any business model, franchising requires effort, resources, and luck to achieve success. Take the time to consider your priorities and choices before making the jump. You'll thank yourself in the long run.

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