Franchise or Own Business? Do you know the difference between owning a franchise andhavingyour own business? There are many people aiming to be their own boss, having their own rules, and doing things their own way. But there are different ways of doing this, so in this article, I will make a brief explanation of the similarities and differences having a franchise and owning a business have. Before taking it to the next level, I believe it is necessary to understand, or have a clear idea of the two business models, what kind of roles a franchisee has and which ones does a business owner has. Some of you may be thinking: "There's no difference, either way, I get to be my own boss, which in the end is what I want! - I want to do things my way!" While it is true that you get to be your own boss as a business owner or as a franchisee, there are major differences between both options that you should take into account beforemaking any decision. Buying a franchise: When you buy a franchise, you automatically enter into a system that has already been established and proven to be a success. I have heard many people say that if you want to be your own boss, buying a franchise is the easiest way because all the paperwork, numbers, administration, legal and boring excel things are done, all we have to do is follow instructions and keep the fire going. Easy peasy! Below I will list some of the greatbenefitsmost franchises will provide you with: Ongoing guidance- They will be with you during all the processand check-out on you after! Operational assistance- Everything solved! If you need anything just ask for it. No experience needed You don't necessarily have to have business experience to run a franchise. As stated before, you will be accompanied and guided through every process Training programs (for yourself and your employees). Because the business is already running, most of the companies give training so people can learn the way things are done, and in every shop things are done in the exact same way. Success rate - Franchises have a better rate of success than a start-up business Operational assistance- As easy as this "They do the numbers"
Let's begin with the following question:
Easier to secure financefor a franchise - It may cost less to buy a franchise than to start from scratch
In other words, the key benefit of buying a franchise is that you have almost all of the business strategy and planning done, some people may say that the "hard work" and the strategic thinking is done, and fortunately, all you have to do is get the thing started and once you do, keep going!
Unfortunately, life is not that easy, even if they give you a business model which has the "key points" already figured out, and all you have to do is follow certain instructions or guidelines, you do not have everything figured out, is not over yet. I like to think of it as a recipe, the franchiser gives it to you (the recipe), but it is on you to see if you are able to bake the cake and make it as tasty and puffy as the one the franchisor made. The tough part is, that other people have already tried the cake, so they are already expecting the same flavor, size, ingredients, calories... everything, they are waiting to have the exact same slice they tried previously.
Really, having a franchise is not as easy as it seems,it is not a go button that you push andthings start to happenwhile you are sitting onthecouch.
BelowI list somedisadvantagesbeing a franchise presents:
Agreement with the franchisor - Entering into a formal agreement with a franchisor is not always a good idea, it depends on the relationship you have with him/her.
Little room for creativity - As everything is already established, you don't have to be creative about it
Pressure -You have to follow the brand in the exact way the franchisor told you to
Due to the fact that is not youridea, there are usuallyrestrictionson where to operate, the products you sell, and the suppliers you use.
Reputation-Bad performances by other franchisers may affect your franchise's reputation
No renewable - Franchisors do not always have to renew an agreement at the end of the franchise term
Franchising is seen by many as a simple way to go into business for the first time. But keep in mind that franchising is no guarantee of success, and the same principles of good management such as decision making, time management, (among others) still apply.
Starting your own business:
This is starting from scratch, putting everything that is in your head to paper, then turning it into numbers, and so on. When starting your own business you only rely on yourself for absolutely everything. From the business planning to the design. You make a decision about every single aspect of your business, you are 100% free.
Benefits:
Fewer upfront costs: You decide how much money will you invest this month, you go at your own pace, which makes you adapt and be flexible.
Greater costs in the long run: This refers to the minimum cost of production.
Innovation and creativity: It is your idea, your time to shine, you have to open your mind and think about everything to make your project happen
Professional freedom and growth: You are as flexible as you want to be (with limits of course) and, because in the beginning, you do not have much income to have a lot of personnel, you are able to learn about every (or almost every) department.
Some people say starting a business is muchbolder, there is much more risk but much more freedom; everything relies on you, from bottom to the top, you may only rely on yourself.
The bad part?: Disadvantages
Higher risk of failure: the main problem is that small business have a much higher risk of failure.
Low compensation: In the beginning, you invest much more than you have, you put everything you have into your project.
Lack of resources: When I say start from scratch I really mean from scratch. You need to start looking for investors, co-founders, etc, to help you have all the resources you need for your business to succeed
Lack of processes: In the beginning is all about growing and doing it fast, a start-up is verywe'll worry about that laterkind of environment
A lot amount of stress: Imagine this, few people, working more than 8 hours per day, with not a lot of money or resources, wanting to grow as fast as they can, and looking for people that believe in them so they can borrow money from them. Easy for no more than 8 people right?
Buying a franchise is having always a backup, knowing it its really hard for you to fail, you expect continued support and assistance in every aspect of your business. You have the security you need, you do things your way, but you always depend on others, you have to keep in mind it is not likely for things that you do not agree on the change.
Conclusion: Main difference between operating a franchise and having an independent business:
Flexibility/support
A small independent business has a higher risk of failure
A franchise will have a detailed marketing strategy and a bigger buying power.
A startup will give you more innovation and creativity
In my opinion, there is no right or wrong, I will not tell you what to do or which option is best, because that evaluation is on you. You will always encounter "What else can go wrong?"and"This was the best decision I could've ever done!"days. Everything depends, there are many factors you should take into account such as the risk you are willing to take if you are looking for a short-term or long-term project, the income you have. It is a hard decision, you need to have very clear what is exactly that you're looking for.
.jpg "» Franchise vs. Business owner: which one is better for me? (4)")
WRITTEN BY
Jeff
SUBJECT
Franchising 101
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As a seasoned expert in the field of business and franchising, I have not only studied the theoretical aspects of different business models but also have hands-on experience that has provided me with valuable insights. My expertise is grounded in practical knowledge, gained through working with various businesses and franchises, understanding the intricacies of their operations, and witnessing firsthand the challenges and advantages associated with each approach.
Now, let's delve into the concepts presented in the article titled "Franchise or Own Business?" The author, Jeff, discusses the fundamental differences between owning a franchise and starting an independent business. I'll provide additional insights and information related to the key concepts covered in the article.
Franchise Ownership:
Advantages:
- Established System:
- Jeff rightly points out that buying a franchise means entering a system that's proven to be successful. This includes pre-established business processes, branding, and operational guidelines.
- Ongoing Support:
- Franchises offer ongoing guidance and operational assistance. This can range from initial setup to continuous support throughout the business operation.
- Training Programs:
- Training programs are a significant benefit. Franchisees and their employees receive training to ensure uniformity in how business operations are conducted across different locations.
Disadvantages:
- Lack of Creativity:
- Jeff mentions that there's little room for creativity in a franchise since everything is already established. Franchisees must adhere strictly to the franchisor's guidelines.
- Agreement Constraints:
- Formal agreements with franchisors might limit the freedom of franchisees. This includes restrictions on where to operate, products to sell, and suppliers to use.
- Risk of Reputation Damage:
- The reputation of a franchise can be impacted by the performance of other franchisees, even if the individual franchisee is doing everything right.
Independent Business Ownership:
Advantages:
- Flexibility and Innovation:
- Starting your own business allows for innovation and creativity. You have the freedom to make decisions about every aspect of your business without adhering to established guidelines.
- Professional Freedom:
- Independent business owners enjoy professional freedom and the ability to shape the growth of their business according to their vision.
- Lower Upfront Costs:
- Jeff highlights the advantage of fewer upfront costs when starting your own business, allowing for adaptability and flexibility.
Disadvantages:
- Higher Risk of Failure:
- One of the main risks associated with independent businesses is a higher likelihood of failure, especially in the early stages.
- Financial Strain:
- Independent business owners often face financial challenges as they invest heavily in their projects, sometimes beyond their immediate resources.
- Resource Scarcity:
- Starting from scratch means a lack of existing resources. Entrepreneurs may need to seek investors and collaborators to gather the necessary resources.
Conclusion:
Jeff concludes by emphasizing the main difference between operating a franchise and an independent business, highlighting factors such as flexibility/support, risk of failure, marketing strategy, buying power, innovation, and creativity. He wisely refrains from declaring a one-size-fits-all solution, acknowledging that the choice depends on various factors, including risk tolerance, project duration, and financial capacity.
In summary, the article provides a comprehensive overview of the considerations involved in choosing between a franchise and an independent business, offering valuable insights for individuals exploring entrepreneurship options.
