Discover the pros and cons of owning a franchise. AtWork can help you understand the advantages and disadvantages of franchising to decide whether you are ready for franchise ownership.
There are more than 800,000 franchises in the U.S. and the number continues to grow, according to the International Franchise Association (IFA). Total U.S. franchise output will increase by 4.1%, from $858.5 billion in 2023 to $893.9 billion in 2024. Entrepreneurs turn to franchising to launch a business with an established brand and ongoing support. It enables investors to diversify their portfolio with a concept that has been successful in other markets.
“Even in the face of macroeconomic factors like high inflation, labor availability, and the cost of capital, franchised businesses continue to outpace the growth of the broader economy,” said Matthew Haller, IFA’s president and chief executive in a statement.
Franchising offers a path to small business ownership, and financing opportunities make this business model accessible to new entrepreneurs. At least 89% of low-cost franchise owners enjoy being part of a franchise and like operating their brand.
AtWork is one of the fastest-growing franchises in the staffing industry. If you are yearning to open a business and considering whether franchising is the right way to achieve your goals, here are 10 franchise pros and cons of the franchise business model.
Pros of Franchising
1. Network support: As a franchise owner, you join a network of peers operating the brand in their local markets. You can share best practices, offer valuable insights, and discuss concerns with other owners. Being able to rely on peer support to help alleviate some of the challenges of starting a new business can make all the difference.
2. Negotiation leverage: Franchisees can take advantage of group buying power. You can rely on the brand’s existing relationships with vendors and suppliers to lower costs. Some franchises offer in-house services to help further trim costs. AtWork provides ongoing accounting services, including payroll funding and processing, client payment processing, garnishment management, tax filing, payments, and more.
3. Innovation: While you concentrate on day-to-day operations, your franchise support team will be focused on innovation to help you stay nimble and keep up with evolving market conditions. The support team provides ongoing guidance and evaluates technology to ensure you have the right tools and systems in place to serve customers.
4. Exit plan: Starting a business is an ideal way to diversify for retirement. But what happens when you are ready to sell? Having a tax-efficient exit strategy is crucial, but nearly half of business owners do not have a plan. By offering an established brand, franchising provides built-in marketability with less risk for potential buyers.
5. Security: Franchising provides security by offering training and support. You will usually receive guidance on daily operations as well as assistance with hiring, marketing, and financing. Nearly 82% of businesses fail because of cash flow problems, according to SCORE. Having a partner can help provide the resources you need to achieve your goals.
Cons of Franchising
6. Contractual commitment: Franchising requires a contractual commitment. Franchise agreements range from five to 20 years. Making a long-term commitment can be daunting to a new entrepreneur.
7. Ongoing fees: As part of a franchise, you agree to pay ongoing royalty fees for the rights to use a brand’s trademark and products. Many franchisors also require you to pay advertising fees to help market the brand. Royalty fees are often calculated on a sliding scale and depend on the amount of revenue your business earns, giving you time to get established.
8. Local market adaptation: Franchising enables you to operate a brand with proven success in certain markets. You may need to make local adjustments to build a loyal customer base in your market. However, most franchisors have regional field support to assist.
9. Hidden costs: When partnering with a franchise, it is important to closely review the franchise disclosure document (FDD). The FDD is a document a franchisor is required to file with the Federal Trade Commission outlining the terms of the franchise agreement. It provides in-depth details on the investment, costs, and support you will receive as a franchise owner. In addition to reviewing the FDD, you should also speak with franchisees of the brand to help validate the potential of your investment.
10. Performance clauses: A poorly performing franchise location can put a strain on the entire system. As a result, many franchisors put performance clauses in their contracts. At the same time, they also provide extra support to franchise owners who are struggling by offering additional training and on-site guidance. Franchisors are invested in the success of their system and take steps to ensure you have the resources you need to achieve your goals.
Start Your Franchise Journey with AtWork
If the pros of opening a franchise are appealing, AtWork enables you to pursue entrepreneurship with a support network invested in your success. For an initial investment of $153,500 to $210,500, you can launch a business in the lucrative staffing industry with a proven brand.
AtWork ensures you are well-prepared to run your franchise, offering extensive training that covers all aspects of the staffing industry. AtWork franchise owners receive at least 41 hours of classroom training, as well as ongoing training courses, trade shows, education or certification programs, and webinars. From marketing to daily operations, AtWork provides the tools and resources needed to streamline your business processes, allowing you to focus on growth.
“AtWork is an amazing brand. Here is a staffing industry in a box. They give you the right level of support and enough support, not just when you launch but along the way,” said Jerry Bland, franchise owner of AtWork in Raleigh, North Carolina.
Being part of AtWork means joining a community of like-minded entrepreneurs. The AtWork franchise network offers opportunities for learning, sharing, and collaboration. AtWork ended 2023 with 82 franchise locations and six company-operated outlets. To support franchisees, AtWork has a franchise advisory council, providing the company with advice on topics such as operations, services, software, communications, and new initiatives.
“AtWork has a good network of people. The collaboration between owners is wonderful. You can call any owner at any time to get help or advice and learn about the tools that they have,” said Lori Brower, owner of two AtWork locations in California.
Ready to Make the Leap?
With AtWork, you can steer your business toward success, backed by a team dedicated to your growth. Get started to learn more about partnering with AtWork to launch a staffing franchise.
