Franchise Model: How to Start an Insurance Agency; Advantage and Disadvantages
How difficult is it to start an insurance agency? And what are your chances to succeed? The answer to the first question is, it is not as simple as one thinks. But that is what new agents around the country do. Whether it will succeed or not, depends entirely on you, and how you operate it. Starting an insurance agency can be difficult and complicated, but not impossible.
You can start an insurance agency from scratch, or you can purchase a franchise outlet. Starting an insurance agency from scratch can be more difficult which is the reason why you should consider the franchise model. So, this article is for you if you have a little experience in insurance and want to know the pros and cons of starting an insurance agency through a franchise model.
Purchasing a franchise to start an agency is one of the most accessible options. This model is gaining popularity because of the wide range of benefits that come along. So, let’s discuss more on its pros and cons:
The advantage you get when you know how to start an insurance agency through a franchise model
If you have enough startup capital, you can buy a franchise outlet. Purchasing a franchise means that your base work is already completed with all the systems in place. You do not have to spend much time in the first few years building a book of clients, spreading the word about your company and figuring out how to keep the lights on. Additionally, you will already have a trusted network of professional people. You will be associated with a well-established and trustworthy brand.
Also, the Franchise Disclosure Document (FDD) revealed that when you know how to start an insurance agency through a franchise model, the franchisor provides you with varying levels of assistance and support. An absolute benefit of this would be less headache while operating the agency.
What is the disadvantage you get when you start an insurance agency by purchasing a franchise outlet?
There are some drawbacks to franchise model of starting an insurance agency too. Depending on the geographic region of the franchised business the initial franchise fee will range between $25,000 to $60,000. That is a hefty amount of money to start an agency. This model also contains a two-year non-compete clause. It may also not allow you to move at the pace you want.
Hence, starting an insurance agency through a franchise outlet is easier than starting an independent agency on your own. Although the initial cost is high, you have more comparative advantages.
But, before you jumpstart, make sure you do extensive research and look at the business model from the perspective of the client, the owner, and the company. Remember, generating money takes time. But be ready on the way for many roadblocks.