Choosing between a franchise and your own startup can be quite difficult. There are pros and cons of both and you have to seriously weigh the differences to make the right choice. There is no straight or simple answer here. You have to figure out what’s best for you. Begin with an assessment of the realities, the possibilities and the comparison of pros and cons of both.
Here is a comprehensive analysis of buying a franchise vs. starting your own business.
Ease, Convenience, Expertise & Relative Certainty Of Success
Buying a franchise costs money, so does starting your business. The former is likely to cost you less money than the latter. If money isn’t the constraint then it is the ease, convenience and quick turnaround time of buying a franchise that might woo you at first. Buying a franchise is indeed easier than starting your own business. You can decide on the franchise, get the paperwork, see if you are eligible or if your proposition gets approved and then you are onboard. You pay the money and get things started. Starting your own business may take much more time. However, this wouldn’t apply for all kinds of businesses. A major franchise may take much longer to take off than a small and otherwise uncomplicated business.
The reason why most aspirants consider buying a franchise is the proven track record. If a business isn’t successful already, then it is unlikely to be in franchising. When there is a track record or proof of a company’s success, the popularity of a product or service, it is much safer to invest in such a business. You cannot be certain of the outcome or the viability with your own business. With a franchise you would get studies, market reports, stats and everything you need at your disposal to know for certain if you would have a viable business. Viability, sustainability and profitability are the three determiners of a business’ fate. All three are assured to varying extents when you buy a franchise.
Buying a franchise would get you all the resources, expertise and help that you need to get started. You don’t have to start your business on your own without knowing the ins and outs. You would get people handholding you and not just any random person. You would get professionals, those who have helped in building such franchise businesses. The franchiser would give you infrastructural, manpower, technical and nontechnical support. It wouldn’t be just a onetime exercise. You would continue to get such support as long as you are a franchisee. This is often the most important factor for people choosing to buy a franchise. Small to medium businesses often have only one owner or two partners and they seldom manage to hire experts in a given niche. A franchiser has much more resources or talent at their disposal which then gets invested in the franchisee.
A Quaint Quid Pro Quo
Now, there are some disadvantages of buying a franchise. First, you wouldn’t get complete freedom or control. You would have to work in accordance with certain stipulations and you will have to abide by all new changes that would be initiated by the franchiser. In effect, you wouldn’t actually be an entrepreneur. You may recommend or try things that you like but it is still a franchise and not entirely your business. If you wanted to be completely free of supervision and wanted to do business at your own accord then such aspiration will remain unquenched.
You wouldn’t be the sole profiteer in the enterprise. Chances are the franchiser would make more money and you would get only a small portion of the commission. There are certain franchises that pay a lot of money to the franchisees but then the chances of loss are also much greater. It is a strange quid pro quo. You would be able to make substantial money only when you risk a lot of money. In that sense, it isn’t different from your own business barring the fact that it isn’t exclusively your business.
Not every franchise extends adequate support or help. Should you not get such help and continue to strive on your own, you might wonder why you would be paying a huge chunk of your revenue when it is you and your resources being put to work to generate the revenue in the first place.
The Specificity Of The Business
You should always consider the type of business you wish to start and what types of franchises are out there in the specific niche. If you wish to open a restaurant or a fast food joint then it might be worthwhile to tie up with a major brand. Using their brand will give you a firm foundation to begin. If you think your business proposition is better than the kind of franchises available in that niche then you should launch your own startup.