Forums: Discussions for entrepreneurs and small business.

Here is the delima. I'll try to make it short. I started talks with a company about buying a franchise.  The franchise is cheap enough that the fee is not a problem.  I have not signed anything, have only received the agreement to look through. 

The franchise is brand new, as in no franchises as of now.  Only launching it now.  So, as I start to look through this and start tallying the costs in my head, I question if I can just do this myself instead.  It is a service, so just as an example, let's take carpet cleaning.

This company has no name brand power right now.  The question is if it will in the future.  Then, the legal set up is up to me, so no help there.  the materials are just told where to get them from, which I have already found suppliers for in the example, the chemicals and the vacuum. 

So, is there any benefit with going with this franchise start up or should I just approach this myself.  The way I see it, after the incremintal build up, I'll be paying close to $6000 a year in fees and be somewhat limited in territory and decision making.  Part of that goes to a national marketing fee, but I am still required to do local marketing as well.  To put it in perspective, that $6000 is close to 20% of the profits for the initial market they own.  Basically to the point of making it a huge difference in income to me. 

I'd just like to see some thoughts from others and see if anyone else has been in this situation.  Go with an unproven start up franchise and pay more or go out on your own and start your own company.  It sounds easy, but at the same time, you'd hate to miss out on the next McDonalds.

I would recommend, given the information you provide, that you do it on your own. I agree that missing out on the next McDonalds would be bad -- but being the franchisor of the next McDonalds would be better than just owning one branch!

The advantage to a franchise lies in what the parent company can do for you.  The parent company helps with training, Local advertising, product, and set up.  It sounds like you would be handling all of these issues and paying a hefty fee on top of that.  So, what is the advantage to you in the start up phase.  From what I read in your post, there is no advantage.

This franchiser reminds me of a segment I saw on Shark Tank a few weeks ago.  Not sure if anyone else watched, but it was the episode where the guy owned a company that cleaned grafitti.

Number one rule, don't be their first franchisee.  They're still new at franchising and you may not get the most out of the deal.

Two, if they don't have any proprietary information/supplies or any other competitive advantage to give you, you have no reason to become a franchisee.

Robert M. Cavezza

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Since they have no brand recognition they will be of little or no benefit to you. Go on your own.

MMMM...  No franchisees, no brand recognition, no legal help.  Tell you what, send me $3000 a year and I will give you the same support and even invite you to Christmas dinner (of course u'll be paying for it).  Thats 50% off...

Startup Help

Agree with everyone. What value are they providing you buy buying their franchise? Brand recognition is one of the BIGGEST benefits with most franchises. If they cannot offer it, you are just buying a business plan. Do they have an actual business running now? If you really believe in this franchise, I would go visit their flagship location(s), ride along on service calls, and see what makes them so unique.

Okay, that's what I thought as well.  Just making sure I wasn't missing something you guys might catch.  Oddly enough, the franchisor told me they had someone else wanting the territory if I did not.  Oh well.  On to planning this out.

and to add to guru's comments, go find someone who owns it and build a relationship with them, invite them out for lunch or dinner (on you) and extract some information out while at it. nothing beats first hand experience

Get the new franchiser to give it to you for free, or no fees for the first five years, and no or 2/3 off for the signup, agree to keep that deal a secret. He needs a first sale that can talk up your new business.