Our handy guide will help you evaluate the pros and cons of a vending machine business and see if it’s worth pursuing.
To know whether franchising is right for you, you need to think carefully about the benefits and risks. Here are the things you need to consider.
The Pros of Franchising
You are your own boss
Although you will be operating under a parent company, a franchise arrangement means that you are the owner. There’s a certain level of autonomy with most franchises, but particularly with smaller operations, such as vending machine businesses.
Established brand and customer base
This is one of the biggest advantages when assessing the pros and cons of franchising. Choosing a business that already has grown a reputation within the industry allows you to flourish on the back of their success. For new business owners with little knowledge in launching new brands, this setup is ideal.
High success rate
Industry reports show that 97% of franchise businesses are profitable. That’s a very high success rate compared to that of a business built from the ground up. According to Forbes, 90% of startups fail. By choosing a franchise, you have a much better chance of surviving even in the most turbulent of markets.
Marketing and advertising support
Some franchisors charge an extra fee for marketing, and others throw in marketing materials as a bundle. Either way, a percentage of your advertising is free as you are running your business on the back of an established brand. But the key thing here is that you won’t have to create your own marketing strategy, as this will be structured and set up for you. Here at Tubz, we offer our franchisees the use of our experienced in house marketing team.
You will receive some level of training when you buy a franchise. In some businesses, training may be minimal. But at the very least, you will be given guidance on how to run your day to day operations, and how to represent the brand in the best possible way.
Operational advice and guidance
Buying a franchise also means that you will receive business support, however little or large. Most franchisors will have a dedicated phone line or an account manager to ensure that you have somewhere to turn when you have questions. There will also be a network of other franchisees from other regions who you can talk to. In this kind of business, you are never alone with your problems.
Product research and development
The one thing you will never need to think about when running a franchise is sourcing, testing or developing new products. This is all done for you by the company, so all you will need to do is manage your stock. This can save you a lot of time (and money) and allows you to focus on the everyday running of your business.
Franchises for every budget
There are franchise businesses of every size, and some can start from as little as a few thousand to big investments in the millions. It all depends on you, and what you can afford. There are also part-time and more flexible opportunities available to fit in with hectic lifestyles.
The Cons of Franchising
You don’t have as much creative freedom
As we’ve mentioned before, you do have a certain level of autonomy. But when it comes to creativity, there are limits. You won’t be in charge of developing your own products or services, which can be a huge positive in terms of time and cost. But it can also be one of the cons of franchising if you consider yourself to be a visionary.
Rules and restrictions
Once you sign the contract, you will be under obligation to run your business according to company guidelines. In some of the more complex franchises, you may be required to use their systems and software. You will also have certain rules and regulations to adhere to.
Initial outlay can be expensive
All franchises require an upfront cost to buy the rights to operate under the brand. Some franchise businesses, such as fast food outlets, are very expensive and can be £500,000+ to buy. But there are many different types of franchises to consider, including some with affordable bundles that start from as little as a few thousand pounds.
Royalty fees and other costs
There may be other ongoing payments to bear in mind. For instance, some will charge royalties and you may need to pay for marketing materials, advertising fees, or training for new staff.
Dependent on franchisor success
Your reputation can only be as good as that of your franchisor. In many ways, you will be dependent on the parent company in order to be successful. This is why it’s important to assess every franchise opportunity carefully, and find a company you trust and believe in.
Is Franchising Right For You?
Buying a franchise business can be an easy way to become your own boss, with the support of a parent company. And you could boost your earnings whilst fulfilling the self-employed dream. That doesn’t mean that everyone is cut out for it. Like any type of business venture, there are downsides to consider. And we advise anyone looking to invest to think carefully and decide whether the benefits of a vending machine franchise outweigh the risks.
Once you are sure you want to make an investment, you will need to familiarise yourself with the franchising process to understand exactly what is involved.
For more help and advice on things to consider when looking for a franchise business, read our post, Should I Become a Franchisee?