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1. In the restaurant business, franchising has several
benefits. But there are also some drawbacks that contrast
the advantages of franchise ownership. When investors
seek an establishment that is easy to open and attracts
pre-existing customers, a franchise restaurant is often the
best choice. But before one purchases a franchise, it pays
to examine the disadvantages of franchising as well as the
advantages. Below are some of the advantages and
disadvantages of franchise ownership.

2. Advantage: Easier to receive business financing

3. Receiving business financing for independent eateries can
be difficult for three reasons: their originality can make it
difficult to assess their revenue potential, they have a
higher failure rate than corporate eateries, and they don't
have the financial backing of a corporation or business
group.

4. Conversely, getting business financing for franchises tends
to be easy for three reasons: the performance of the
organization's existing locations demonstrates revenue
potential, pre-existing customers are often present due to
the organization's other locations, and corporate backing
supports each new location.

5. Disadvantage: High purchase price

6. Restaurants that have corporate backing and high revenue
potential usually cost more than independent
establishments. In the case of elite franchises such as
McDonalds, the price for a single location could reach a
high seven-figure mark. Nevertheless, the consistently
high income offered by such franchises makes them an
excellent long-term investment.

7. Advantage: Access to elite marketing materials

8. Developing elite marketing materials requires time,
human resources, and money. For independent
restaurants, these things are usually at a premium,
especially in their first year of operation. Corporate
restaurants, on the other hand, have access to marketing
materials available through their corporate office's
marketing department. Among franchising advantages and
disadvantages, access to elite marketing materials is one
of the top advantages.

9. Disadvantage: High employee turnover

10. Most franchises offer their workers a low hourly wage in
keeping with national pay averages for non-skilled
workers. Consequently, the workers view their jobs as
temporary and disposable. When new opportunities arise,
they quickly leave or reduce their hours. For franchise
managers, this means that the hiring process experiences
temporary pauses, but never concludes. Employee
turnover is lower among workers who receive part of their
pay through customer tips.

11. Advantage: Excellent resale value

12. Due to their consistent income, well-defined customer
base, and access to corporate support, most franchises
command a high sale price, one that often only attracts
seasoned investors who have deep pockets. In many cases,
franchisees sell their restaurants for significantly more
than they paid for them, especially after owning them
long-term.

13. Before buying a restaurant, be informed

14. Buying a restaurant is a serious investment decision, one
that should be preceded by careful examination of the
benefits and drawbacks of owning a particular type of
establishment. The benefits of owning a franchise include:
the ease of receiving business financing, access to elite
marketing materials, and excellent resale value. The
drawbacks of owning one include high purchase price and
high employee turnover. Prior to making a buying
decision, investors should consult a commercial realtor
who has experience in selling restaurants.

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