The Small Business Association said that 90% of newly opened small enterprises would not survive beyond the first year of their business, unlike a franchise business.
Franchising could be risky for those who aren’t familiar with their chosen market. It could be expensive at the same time, depending on your preferred product or service. Given this information, the right time for buying a franchise over going solo would rely on how much money you’re willing to lose from a business venture.
If you’re looking for a low-cost sign franchise, meeting the required capital won’t be enough to keep your business afloat. The caveat of an affordable franchise mainly involves brand establishment, which is not necessary if you’re buying a franchise as well-known as McDonald’s.
The Cost of Franchising
Some entrepreneurs have spent more than the recommended budget for aggressive marketing strategies since this is the compromise of paying a small franchising fee. The nature of the business will also be essential to determine if it’s a good fit for your personality. Those who find it hard to follow the rules and maintain compliance with standards are better off with building a business from scratch.
In case you prioritize business security over freedom of making choices, then franchising serves as a better option. Most franchisers offer training and support for their members, which come at a price. For instance, a McDonald’s franchise will require you to pay a $45,000 franchising fee and 4% of gross sales as a service fee.
Most people find it hard to choose between a franchise and a sole proprietorship since both have benefits and disadvantages. Still, a franchise provides aspiring business owners with some leverage such as an established that no longer requires heavy advertising or just having more resources from the onset by spending a certain amount.