Franchising vs Starting from Scratch: Jean's Dilemma

Jean's Concern About Franchising

Jean's key concern about franchising is the financial commitment required; she must pay an initial franchise fee and continuous royalties despite the associated benefits of marketing support, management advice, and a business model.

Explanation

Jean's key reservation about pursuing a franchise as opposed to opening her own gym from scratch is that Jean must pay a franchise fee to get started, along with a certain percentage of profits. This is a common concern with franchising. In exchange for the proven business model, brand recognition, training, and support that a franchise provides, franchisees like Jean are expected to pay an initial franchise fee along with ongoing royalty fees, which are usually a percentage of the revenue generated.

Although Jean gets marketing support, management advice, and a tested business model from a franchise, these benefits come at a cost which would potentially affect her profit margins, especially in the initial stages of the business.