Recently, I have had a customer from Australia asking me on my opinion about purchasing a franchise as opposed to opening your own store. What I write on this topic is solely based on my personal opinions and observations and is mainly used as a "reference" for you to think about when deciding. I personally am not for or against franchising, I believe that the option you choose really boils down to your own budget, timing, and comfort level in starting up a business.
As many customers have asked us before, why don't we create a franchise using our brand name (Hawaiian Snow) like many other companies out there? I usually tell them one thing: flexibility. Before we go into the bad parts of buying a franchise, I want to speak about the good sides.
Buying a franchise from a company requires start up costs, royalty fees, and at times building costs. Even though there are quite a lot of initial costs in buying a franchise, you get sort of a mentorship from the company you are buying from. The franchiser will (hopefully) assist you in everything you need in starting up the store. From the store layout (stands/mobile), to offering you protected regions or locations. The franchiser will also assist you in training as well as providing you with all the promotional materials you will need for your store. What you are really buying is the brands reputation as well as the support that comes associated with the brand. The initial costs will help reduce quite a lot of headaches associated with starting from scratch yourself. It is like buying an existing home rather than building a house from a vacant lot.
Now we get back to why our company doesn't offer franchises, which is flexibility. Usually when you buy a franchise, you would have to pay fixed royalty fees and in certain franchises the franchiser will take a percentage of your profit. In certain scenarios, the start up cost of owning a franchise may not be as cost effective as opening a store from scratch and built to your own specification. Going back to the home analogy, buying an existing home may be less headache, but it doesn't necessary mean it will be cheaper than building one yourself. When you build something yourself, you have full control over what you need/don't need and would not have to follow any guidelines. When you purchase a franchise, you would be required to purchase all your supplies, machines, and flavors from the franchiser. The lack of options could sometimes be frustrating. You would also sometimes be requires to sign a set year contract where you have to operate the franchise for a set amount of years. You would also need to understand that not all franchise owners operate on the same level, some owners will not run their stores as good as others, and since all of you guys share the same name, any detrimental effects from another store could potentially affect your store due to the same branding.
To sum things up, I believe that franchises are great for people who are looking for a quick start up. It will reduce a lot of headaches with a business start up such as training and promotions. You will have an existing brand name backing you up and a one stop shop for all the needs of your business. Consistency should also be more predictable since you will mainly have one vendor. However, if you are on a limited budget, looking to expand something of your "own", or have a lot of time on your hands to learn the ropes, and are not afraid of the painful growing phase of starting a new business, then a franchise would perhaps not be as suitable for you. Franchises are not for store owners that wants diversity in their products offerings, flexibility with vendors, and who love to be in control.
This section will tell you the basics on how to make a good Hawaiian shave ice! Please feel free to ask questions you may have regarding local shave ice and shave ice in general.
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