TO BUY OR NOT TO BUY A SERVICE FRANCHISE

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The U.S. service business sector is becoming increasingly important, both in the business-to-business(B2B) and the business-to-consumer (B2C) segments. And so it goes for franchises also where service franchises often sell faster than product franchises, the old mainstay of franchising.

It’s not difficult to understand why this is happening. We have become a population where obtaining expertise for our decision making and finding ways to either save or make money and save time are paramount. So, if the service concept fills one of these needs we can be fairly sure that the customers will come. In addition, a franchisee can often operate the business from home and incur a comparatively low investment.

Product or retail franchises are most prevalent in the food and restaurant businesses. Service franchises are diverse; for example, tutoring, domestic and commercial cleaning, medical billing, tax services, interior design, and childcare, to name only a few.

What are the attributes of buying into a service franchise? There are several. Service franchises are generally at the low end of the investment spectrum and often entail lower operating costs. The business can sometimes be home-based and usually requires fewer employees and/or personnel to operate. Service franchises often employ a skill, sometimes a labor-oriented one such as a plumber, or a specific learning skill, such as a computer repair service.

But, if you’re seriously considering buying a franchise, you should know that there are some negatives associated with a service franchise as versus a product franchise. For example, filter this into your decision making:

***It is more difficult from a sales standpoint to sell an intangible service rather than a tangible product.

***Size of the operation is sometimes limited because customers purchase your time and performance rather than a mass-produced product.

***Service quality may be difficult to standardize because of variations in human performance.

I’ve operated both a consumer product business and a service business with aspects of B2B and B2C and see positive and negative aspects for the business owner with both of these. If you’re confused and/or uncertain about a decision of this kind, send me an email and I’ll be glad to give you my take on this.

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