The Good and Bad of Franchise Businesses
In recent years Hispanic women owned businesses grew by 60%. This rate is twice the growth rate of male owned business. Clearly Hispanic women are turning to business ownership in order to improve their lives. This column will be dedicated to giving useful information and resources geared to Hispanic business women or those aspiring to own a business.
Minority women, as a group, tend to open more franchises than other women starting businesses. If you have been thinking about opening up a small business you may consider a franchise operation. It is estimated that one in every 12 businesses in the United States is a franchise. It's important to explore both sides of franchises to determine if it's the right business model for you.
Advantages
Established name. Name recognition can go a long way toward moving merchandise. A small business that is not a franchise will have to spend a good deal of time and capital establishing a solid track record and name recognition. A franchise likely already has this.
Corporate marketing. While individual franchises will do their own advertising and marketing, the corporate entity will still be doing their own work toward promoting the business' name. This saves individual franchises money.
Savings on equipment and inventory. Franchises will have bulk purchasing power because franchises typically must feature the same brands and equipment throughout their satellite locations. Buying in bulk drives down per unit cost of many items.
Other franchisee's past experiences. Routine meetings and strategy guides can help navigate the tricky world of small businesses. While there will be some trial and error, franchises come with a playbook of sorts that may offer guidelines and strategies for success.
Disadvantages
Working under the auspices of a larger entity restricts some of the creative freedom a small business owner might want. In general, franchisees must discuss ideas and decisions for the business with the franchisors before execution.
Franchisees are expected to pay dues to the franchisor. The average royalty fees paid by franchisees range from 3 to 6 percent of monthly gross sales.
Franchise initial investment could be considerable. Some franchisors will also want to ensure that a potential franchisee have a considerable savings account for other expenses. Many times franchises are started by partners simply for the startup costs involved.
Not every franchise will work in a particular geographic area. Researching franchises takes time. And after all of that effort and application, a potential franchisee may still be rejected by the parent company.
Franchise businesses account for at least 40 percent of all retail sales in the United States.
Here Are the Top 10 Homebased Franchises for 2011:
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