Franchise Tips

Pros and Cons of Being a Franchisee

By September 13, 2019 No Comments

Are you considering a franchise as your next business venture? If so, you may find yourself wondering about the pros and cons of being a franchisee. This is a common concern for first-time franchisees looking to figure out whether or not the franchise model will support their goals. There are many associated benefits with being a franchisee, but there can also be some cons depending on how you want to run your business. It’s important to determine whether or not being a franchisee is a good fit since starting a business of any kind, whether a franchise or a business on your own, means that you are assuming financial risk. To help you determine whether or not you should choose a franchise, we’ve created this helpful guide that covers the pros and cons of being a franchisee. 

The Benefits and Drawbacks of Being a Franchisee

Being an entrepreneur can seem like the perfect life, but as with most things, there are always advantages and disadvantages to consider when operating a business. Owning a franchise is not for everyone, but for many individuals, it can offer opportunities to grow a successful business, manage their schedule, and develop new skills. Before starting a franchise, it’s important to fully understand the different roles between the franchisor and franchisee and the different benefits and drawbacks of being a franchise owner. Below is an overview of some of the top advantages and disadvantages of being a franchise owner. 

The Benefits of Being a Franchisee

  • Brand Recognition: One of the most significant benefits of opening a franchise is that your business will already have brand recognition. Franchising will allow you to partner with a brand that is established and has curated a brand experience and standards that the public has come to know and expect. As a business owner, this is extremely valuable as it will immediately draw customers into your location and allow you to skip many of the time-consuming tasks that come with starting a business from scratch. The marketing, business plan, and franchise operations is already in place for you. You won’t need to develop a business strategy, collect market research, determine what product(s) and service(s) you are offering, test whether or not the public wants and responds to those offerings, and scale your finding to maintain profitability. Instead, as a franchise owner, you are handed a business that has already been through those stages. You can immediately tap into brand recognition that has been fostered and developed over time.
  • Established Customer Base: Another benefit to opening a franchise is that there is already an established customer base that recognizes and enjoys the brand and services offered. When you are opening a business from the ground up, it’s up to you to build a customer base that will recognize your brand and become loyal to it, which can require a significant amount of time and effort. When you are a franchise opening a new location up, that customer base already exists and will be more likely to engage with it. Keep in mind that this customer base will also expect that the services and products that they are looking for will be provided. When there is an established customer base, those customers will have a loyalty to the business that you can harness to immediately start your business off on a great note. 
  • Established Logistics and Supplier Relationships: As a new business owner, it can be challenging to find reputable suppliers and to build a mutually beneficial relationship with them. Initially, it is not uncommon to waste capital and time on trying to find the right supplier relationships and logistics to make sure that your business functions smoothly and efficiently.  As a franchisee, the franchisor will connect you with reputable suppliers and vendors to help provide you with everything you will need for your business. In many cases, the franchisor will also have established rates with preferred vendors that will allow you to tap into immediate cost savings from your franchisor’s relationships. In addition, the franchisor will have already endured the trial and error to determine the best logistics to keep the business running at an efficient hum, which means that you can skip the headaches and go straight to having all the tools you need to run a successful franchise from the outset. 
  • Training Programs: Training employees is a challenge in any new business. Employees are what will make your business successful and they will be the primary interface with the public. This means that all employees play a significant role in fostering loyalty with customers and helping to build the business. It is vital to not only select employees with the right attitude, experience, and skills, but also to train them in repeatable processes and operational procedures that will allow them to be successful. As a part of a franchise network, customers must receive the same level of service and help at each location, which is why your franchisor should assist in training programs that will train new employees about the company. Depending on the franchisor and what they offer, this may include things like on-site training, training in using software products, briefings on daily operations, opening procedures, and more. Different franchisors offer varying levels of support for training new employees, so if you are considering franchising, this is an important area to inquire about. 
  • Assistance Opening the Business: As a new business owner, arranging the opening for your business can be a daunting and stressful prospect. Being a franchisee helps to reduce the stress of opening your business because your franchisor will be able to offer insight and advice on what they have observed is most successful for opening stores and what you should do to create the best opening experience possible. Some franchisors may also help to provide grand opening marketing and advertising  and help their franchisees ensure the right amount of inventory for the opening based on their experience. 
  • Easier Access to Financing: One of the biggest obstacles for many individuals looking to open a franchise is obtaining the financing necessary to fund their new business venture. Depending on what type of franchise you are interested in opening, the cost to buy into franchise ownership can range from thousands of dollars to over a million, which doesn’t include all of the other start-up costs and royalty fees that franchisees are required to pay. Just as with any business venture, franchise ownership requires significant financial investment from the franchisee. For many individuals, this means needing outside financial assistance. Researching and pursuing various financing options can be stressful and worrisome for many potential franchise owners as they often require significant financial disclosures and paperwork to determine eligibility. Franchisees can sometimes obtain easier access to financing based on the franchisor’s relationships and financial stability. In addition, being a franchisee can help some individuals to qualify for a Small Business Administration loan, which has strict eligibility requirements. The Small Business Administration reserves a portion of its loan allotment specifically for franchises. 
  • A Franchisee Network and Support from Your Franchisor: When you start a business from scratch vs. a franchise, many individuals don’t have a support system of other individuals who have been through similar experiences, which can feel worrisome and scary for first-time business owners. Being a part of a franchise allows you to bypass this worry by allowing you to tap into the support network of the franchise. Not only are you able to access the insights, knowledge, and resources of the franchisor, you are also able to tap into a network of other franchisees who are working in the same business and have been through similar experiences. By using these resources and opportunities to your advantage, you can incorporate lessons learned and experiences from other franchise owners r to prevent unnecessary stumbling blocks down the road. With a franchise, you can own your own business without being completely on your own. You get the freedom of being your own boss, while still having access to a support network that you can rely on when you need it to help navigate unfamiliar or difficult situations.

The Drawbacks of Being a Franchisee

  • The Need to Operate Within Franchise Regulations: While this may not be seen as a drawback for many people, being a franchise owner requires you to work within the structure that the franchisor mandates. If you are looking for a business where you will not have to answer to anyone but yourself, franchise ownership may not be the right fit for you because it requires adherence to rules, regulations, and directives provided by the franchisor. For many franchise owners, the structure and guidance provided by the franchisor set the business up for success and allows them to focus on other aspects of the business, but some individuals may see this need to follow the guidelines established by the franchisor as a drawback to franchise ownership. 
  • Ongoing Royalty Payments: Another potential drawback of franchise ownership is that franchisees are required to pay ongoing royalty payments to the franchisor in order to continue using the brand and systems provided by the franchisor. In addition, some franchisors may require franchisees to pay a designated amount towards marketing and advertising expenses. Many franchisees see these ongoing payments as a tradeoff for eliminating the start-up phase and being able to immediately profit from a known brand and successful business model, but it is a facet of franchise ownership that can be seen as a drawback. Some franchisors may require their royalty payment as a flat-rate fee, while others may calculate it as a percentage. It’s important to discuss royalty payments and any other ongoing fees with a potential franchisor before entering into an agreement as this will give you a full picture of how to finance a fitness franchise. 

Franchising with Rush Cycle 

Cycling studios are one of the most popular types of boutique fitness studios to tap into as a franchise owner. Many cycling studios experience quick growth that allows franchise owners the ability to achieve profitability at an accelerated rate. To thrive in the boutique fitness industry, it is necessary to have a community with a unique culture and a strong customer base. This can take years to build successfully, which makes franchising into an established brand and business model an attractive option. If you are interested in buying a franchise in the boutique fitness industry and want to build a positive community around fitness in your business, Rush Cycle may be a perfect fit. 

While opening a full-size gym can cost anywhere from $500,000 to several million dollars, starting a franchise has much lower start-up costs and a more affordable entry point. At Rush Cycle, the entry point to open your own franchise is between $426,00- $550,000, which allows you to open your own business for a price point that is much lower than a traditional full-size gym. If you want to become a fitness franchisee, there is a high potential for growth. As a Rush Cycle franchise, you can open an indoor cycling studio and invite the community into your studio to create a unique culture with other fitness enthusiasts. We are positioned for continued growth over the next several years and are one of the fastest-growing indoor cycling franchises in the country.  By becoming a franchisee, you can become a part of that growth and create a fitness community in your area. Rush Cycle currently has twenty-one locations across the country and eighty more that are in progress. Buying a franchise can be a very rewarding career path if you see yourself being your own boss. At Rush Cycle, we make it easy for you to find success in the boutique fitness industry. If you’re interested in franchising with Rush Cycle, reach out to us today to talk more about this franchise opportunity.


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