Pros and Cons of Investing in a Pet Franchise

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A franchise is a business model where a proprietor licenses the use of their company name, trademarks, products, and business methods to other entrepreneurs. It also may be referred to as a chain. 

There are two primary types of franchises. The first is the product or trade name franchise model, where the franchisor sells the rights to use the brand name or product to the franchisee (this is common in the auto or soft drink industries).

The second kind is the business format franchise model, where the franchisor provides the name and product as well as additional support and services (such as training or marketing materials). 

In either franchise scenario, the franchisor generally receives an up-front fee to allow the entrepreneur to operate in a specific geographic area plus regular royalty payments based on sales income.

There are many pet-related franchises that provide services such as pet sitting, dog daycare, pet boarding, retail product sales, dog training, grooming, waste management, pet bakery services, and more. Let’s take a look at the pros and cons of pet franchise ownership:

PROS OF FRANCHISE OWNERSHIP

Getting to be your own boss

Many entrepreneurs are driven to work for themselves, and this can be a key reason that they are interested in franchise ownership. Franchisees get to be the boss from day one, supervising the hiring and training of any additional employees.

They also get to choose the specific industry they will invest in—a business that they find interesting and potentially profitable.

Access to a proven business model

New entrepreneurs may be overwhelmed when trying to come up with a business plan, a catchy business name, and marketing materials. Becoming a part of an established pet franchise frees a new business owner of these concerns, providing them with a proven business model that can be easily replicated in a new territory.

Established brands have high visibility and customer loyalty, and a new franchise can capitalize on the company’s prior success in other markets.

Corporate guidance and training

The franchisor usually offers a full array of corporate guidance, training, and support. A franchisee has the advantage of not having to start a business from scratch. They may have access to a wide variety of perks such as marketing materials, contracts, formal training programs, financing, assistance with retail location selection, and website development.

High earning potential

A pet franchise can be very profitable, but you do have to take into consideration the start-up costs and royalty payments. Be sure to talk with other franchisees and read all disclosure information from the company to come up with accurate and realistic expectations.

CONS OF FRANCHISE OWNERSHIP

Expensive start-up costs

Opening a pet franchise is usually not cheap. Most franchisees need to qualify for a small business loan or find investors to pay the initial start up costs. Retail locations can be particularly expensive to secure, involving many real estate fees, lease fees, facility upgrades, signage, and permits. The franchise fee is also usually significant, generally being in the $30,000 range or more on average.

Royalty payments

As a franchise owner, you are responsible for making royalty payments throughout the life of your business. These fees can range from 3 percent to 12 percent of revenues, making a significant dent in your profits. You do receive services from the corporate office in return for these royalty fees, but it can be a shock to see a significant chunk of profits being diverted for such payments.

Following corporate rules

Franchisees must follow corporate rules with regard to branding, store design, logos, and many other policies. If you are not comfortable with following the corporate office’s lead on such decisions, a franchise may not be right for you.

Minimum revenue quotas

Franchisees may have to meet minimum sales quotas to meet royalty fees or pay the difference out of their own pockets.

This can put significant pressure on the business owner (though some franchises have a reduced sales quota or royalty during the first year to relax such pressure a bit).