Is it worth investing in franchises?

Today we can find franchises in almost all sectors and activities and for all tastes and budgets. Investing in franchises means putting an invested capital to work in search of a return. We can find investment franchises, management franchises and self-employment franchises.

Investing in franchises does not mean guaranteed profitability, as many may think due to lack of knowledge. A franchise is a contractual relationship between two people or companies, known as the franchiser and the franchisee. There is no employment relationship, only a commercial one where the franchiser gives the franchisee the licence for a brand, methodology and know-how of his business in exchange for a financial consideration. When the franchisee buys a franchise, he reduces the risks and the time and work of doing it on his own, but in no way eliminates them. 

When an entrepreneur considers investing in franchises, he begins a search for the best franchise to invest in. Nowadays, the sources of information have evolved at the speed of light: before it was necessary to buy franchise guides or to attend fairs (where we could only find a few represented franchises). Today, through Google we have access to hundreds of information sources.

Of course there is plenty of information, but with franchises you have to be careful, as with any investment you want to make. The franchise concept as such is successful but there are many unhappy franchisees with their investments.

Everything depends on each particular case, on the franchises under study, on the conditions negotiated in the contract and on the advice received by the investor from Franchise Consultants.

A quick summary of the advantages and disadvantages of opening a franchise, could be the following:

Advantages of franchising: The franchisee benefits from the knowledge, experience, brand and support of the franchisor.

Inconveniences of the franchise: Strong dependence of the franchisee with the franchiser and some, sometimes excessive, costs of belonging to the franchise.

Therefore, before investing in a franchise you should be clear about this:

- It provides you with knowledge, skills or training that you cannot get on your own.

- It has experience, reputation and good results.

- The business plan and its numbers are real and achievable.

- You have to see yourself working or managing that business in the medium term, not just in the short term: you have to like it and see yourself as capable.

It is crucial to get good advice if you want to invest in franchises. Franchising is an interesting way to start a business, but you must make sure that you pay for what suits you, and in exchange for acquiring what you do not have or are not capable of doing yourself.