There are two primary advantages to buying a franchise as opposed to starting a business from scratch. First, franchising provides a small business owner the opportunity to own a business using a tested and refined business system. This attribute reduces the time and the amount of experience needed to get a franchise business going. In addition, the trademark that comes with the franchise provides instant legitimacy for the business. For instance, if you’re interested in opening a fitness center for women, you’ll likely attract more customers by opening a Curves or Lady of America franchise than a new, independently owned business. The second advantage to buying a franchise is that the franchisor typically provides training, technical expertise, and other forms of ongoing support. For example, if you buy a Curves franchise, your initial investment gets you a weeklong training program at Club Camp—which is Curve’s training center in Waco, Texas. Additional training is provided at regional events and at the company’s annual meeting, and any franchisee needing a refresher can return to Club Camp for free. This type of support is what attracts people of all backgrounds to the franchise concept, regardless of their prior work experiences. “We get people from all walks of life, says Cassie Findley, director of continuing education and research at Curves. “We get homemakers who want to become entrepreneurs and run their own businesses. We get retirees who want to help women change their lives, and we get a small percentage of investors. They’re not physical fitness professionals when they come to us.”^[1]

Franchising provides a small business owner the opportunity to own a business using a tested and refined business system.

The main disadvantages of buying a franchise are the costs involved and the loss of some of your independence as a business owner. The total initial investment to get a franchise up and running varies from $31,400 to $53,500 for a Curves franchise (depending on the location and other factors) to $74,900 to $222,800 for a Subway. The monthly royalty payments are permanent. While there are similar costs involved with starting a business from scratch, there are no ongoing royalty payments. In regard to independence, many franchise systems are sticklers about doing things in a specific manner. McDonald’s and other fast-food retailers, for example, are strict in terms of their restaurants’ appearance and how their food is prepared. As a result, franchising is typically not a good fit for people who like to experiment with their own ideas and are independent.

Ultimately, franchising represents an attractive middle ground for many people. So says Joe Cummings, the purchaser of a PostNet franchise. A PostNet franchise is similar to a FedEx Kinko’s store. After a 21-year career with Bristol-Myers, Cummings took a buyout and spent a year deciding on what to do next. Commenting on why he settled on a PostNet franchise rather than opening his own business, Cummings said, “I wanted to get what I call the best of both worlds—the support of a proven system in an environment that’s really entrepreneurial. I felt a franchise was the best way to do that.”^[2]

The main disadvantages of buying a franchise are the costs involved and the loss of some of your independence as a business owner.

One note of caution: You should be careful if you decide to buy into a franchise system. While there are many excellent franchise systems to choose from, some systems never live up to the level of support promised. The best way to check out the merits of a franchisor is to ask for the names, addresses, and phone numbers of several of the franchisor’s current franchisees and then call these individuals and ask them about their experiences. You can also ask for a copy of the franchisor’s Franchise Disclosure Document (FDD), which contains detailed information about the background and financial health of the franchisor.