Home-Based Franchising: 3 Challenges of Can’t Escape Buyers

Small Business LoanFranchising makes starting up a home-based business more attractive. It can be less risky, considering there are already procedures and strategies in place to generate profits. Banking on the brand’s popularity, you might not have to worry about capturing a segment of the market because of its existing customer base. The fact that your operating your venture in your own backyard helps reduce your overheads and make it more convenient for you to run.

But, no matter how enticing the idea of buying a home-based franchise is, it’s not all roses. There’s a couple of drawbacks you can’t avoid if you pursue this route.

Steep Cost

It’s not unheard of to pay more than $40,000 just to get the rights to use a relatively well-known brand name — not to mention the cost of all the needed equipment. Be prepared to invest a substantial amount.

Although there are many lenders offering small business loans in Bloomington, Venturebankonline.com recommends it might be better to borrow a greater amount compared with launching your own brand.

Legal Issues

Signing a contract with the franchise owner would most likely put you at the disadvantage. You’d rarely see a franchise agreement that’s not heavily one-sided — of course, in the favor of the author.

In addition, you might encounter zoning problems along the way. Just because you’re using your place as the location of your store doesn’t mean you can do whatever you like. You must know the restrictions in your area to stay in good terms with the local government — and your neighbors.

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Lack of Freedom

You’re hands are tied nearly 100% at a time. Purchasing the franchise often doesn’t always include the liberty to make your own rules that might affect the brand.

For instance, you can’t make promotions on your own, or alter the recipe of the food products you sell. No matter how bright your idea is, it should better stay in your head to avoid having friction with the franchise owner.

Franchising doesn’t mean you’re flushing money down the toilet; in fact, you may even decrease your chances of failure if you franchise. There are just red flags you need to be aware of, so do your due diligence before making this big decision.