Advantages and Disadvantages of Franchising in Today’s Market

Many ambitious and enterprising entrepreneurs like you are interested in starting a business, perhaps even building a business portfolio with multiple locations under your belt. Business ownership is a challenging, but potentially rewarding endeavor to pursue. Many businesspeople decide to take the leap from employee to employer and open their own business to rise to personal and professional success. But it’s not a guaranteed success; the risk of business failure is real, but there are ways to minimize the risk. Opening a franchise, like an Altitude Trampoline Park, is one such way. Let’s take a look at how franchising developed in the U.S., the advantages and disadvantages of franchising, and why franchising continues to be a profitable business choice to this day.

Franchising in History and Practice

Before we get into the advantages of franchising, let’s briefly look at how franchising has evolved in the U.S. According to the International Franchise Association’s website one of the earliest examples of franchising can be traced all the way back to 1731. One of our founding fathers, Benjamin Franklin, engaged in an unofficial example of modern franchising when he and Thomas Whitmarsh of Charlestown, South Carolina entered into a business agreement. Franklin agreed to purchase and equip a printing business in Charlestown, and in return Whitmarsh would print materials as directed by Franklin, including Franklin’s famous “Poor Richard’s Almanac.”

The first official modern franchise was Harper Method Shops, opened in 1891. From there, franchising continued to grow, encompassing some of the biggest brand names in the country, including General Motors, Coca-Cola, and McDonald’s. Today, franchising exists in three forms: product (the franchisor licenses franchisees to carry and sell a product), manufacturing (the franchisor licenses franchisees to make and distribute products), and business format model (the franchisor licenses the franchisee to operate a business using the brand name and business model of the franchisor). The third form is the one we’re concerned with.

Franchising Pros and Cons

Like any form of business, there are advantages to franchising and disadvantages to franchising. Whether this makes franchising a good fit for you depends on factors such as your personal and professional goals, your preferred business practices, and your chosen industry. First, let’s look at some of the boons:

Franchisors help their franchisees with training, advice, and support services like marketing and large-scale advertising.

Franchisors provide franchisees with a proven business model, many of which make a franchise a turnkey business.

Franchises provide brand recognition, which helps build a customer base for your business.

Banks and lenders are more likely to provide a business loan to start a franchise due to its proven business model.

Franchises have a lower rate of failure compared to independent businesses.

Franchisors must meet legal requirements, such as providing a franchise disclosure document (FDD), which protects the interests of franchisees.

It’s important to acknowledge that no system is perfect, and franchising does have its challenges to overcome. Some of the most common drawbacks to franchising are:

Franchisees have fewer opportunities for creativity in how they operate since they’re required to meet the standards set by their franchisors.

Some franchisor requirements may conflict with a franchisee’s personal preferences and may require some compromise to gain the outweighing benefits.

A franchisee doesn’t have financial privacy, since they must make regular reports to their franchisor.

Viable Before, Viable Now

Franchising has been a long-standing practice, and for those suited to it, the advantages of franchising outweigh the disadvantages. According to a July 2023 report from Bremer Bank, federal interest rates increased from 5% since 2022, and market-based interest rates had a 10-year treasury yield increase of 1.5% to 3.8% from 2022 to mid-2023. The rising interest rates resulted in more difficulty in securing business financing; the proven business models of franchises like Altitude help franchisees like you secure this funding even today.

Hiring staff has also become a bigger challenge in the current economic climate. Talent acquisition technology company Jobvite said in a 2023 report that 81% of interviewed talent recruiters said hiring was more difficult than the previous year, and 63% said hiring volume grew. A franchise like Altitude, thanks to their low rate of failure, makes an appealing job prospect to talented, quality workers looking for employment.

Lastly, the support of franchisors helps reduce the uncertainty of your business’s success. The established reputation that comes with a brand name, along with the administrative assistance and industry connections, takes much of the guesswork out of starting your own business. While you might not get to make all the decisions about your business model and operations, you can rest assured that the methods you’re required to are effective. A franchisor took the time and made the effort to test their business model in the open market, to smooth out the bumps and make it successful enough to use as a template for other entrepreneurs to start their own businesses. Compare that with independent small businesses; online financial publication Investopedia reported in 2022 that 20% of small business start-ups fail within the first year, and 50% within five years. Proven viability is an asset in any economy, but especially one where a business going under shortly after starting is common.

Time and Market Tested

The advantages of franchising prove to be a solid foundation for small business success for owners like you, as well as a great method of growth for the brand. They provide a growing market presence and improved brand recognition for the franchisor, and for the franchisee they allow entrepreneurs who know the local market and customer base to bring their communities quality products and services, ensuring their own financial and professional success. While this does require the sacrifice of some autonomy and agreement to meet the franchisor’s expectations, providing the franchisor with trust in their methods and experience is the key to achieving many a would-be business owner’s goals.

Reach New Heights of Business Success with Altitude

We’re thrilled to offer you the opportunity to find out how we could be the best franchise opportunity for you. Our trampoline park franchise has locations open in multiple states, and there are still more untapped markets out there where you can be the first to bring our brand of active play entertainment to the community. We provide you with all the training necessary to open and operate one of our parks, as well as multiple revenue streams, location selection assistance, and layout plans to make the most of your park.

Don’t miss your opportunity to be the first to open a trampoline park in your area. Fill out a franchise form today to learn more about franchising with Altitude.

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