Ways of owning a business

Challenges of starting a new business

• Requires more time and effort than an established business

• Start-up costs are often high• You have to convince lenders that your

business will work• It is risky.

The rewards of a new business

• You don’t inherit a previous owner’s reputation.

• You can build your business your own way.• You get personal satisfaction.

Existing Business

• You can take over leases with lower rents.• You get equipment and furniture.• You benefit from a business with a good

reputation.

Drawbacks

• Poor location• Competition • Market outlook may have changed• Building or equipment might need expensive

repairs• The business might have a poor reputation.

Franchise

• Pay to another company’s products• You pay a fee to buy into the company• Pay a percentage of your profits• While you are in charge you have to follow the

company’s guidelines.

Benefits

• Recognized product name• Established management system• Business reputation and customer goodwill• Training and support services• Advertising• financing

Drawbacks

• Sometimes less profit• You have to pay a portion of profits to parent

company• Could be less satisfaction

Homework

• Find the franchise fees for • McDonald’s• Smoothie King• Wendy’s • One choice bonus if you find a franchise that is

not food