For many professionals, the daily grind of working nine to five eventually ignites a desire for independence and control. If you’re also thinking of starting your own business, one of the significant decisions you’ll need to make is choosing a franchise or going completely independent. Keep reading to discover some pros and cons so that you can make a well-informed decision.
Franchise
A franchise allows entrepreneurs to operate a business using an already established company’s systems and brand name. Profitable franchise opportunities exist across many industries like food, retail and education.
Apart from these traditional sectors, there are many unique and interesting concepts available as well, such as pet care, gaming or a LEGO franchise opportunity. With such a diverse range of options available, you can easily find one that matches your interests. Following are the pros and cons of operating a franchise.
The Pros of Joining a Franchise
Franchises have a proven business model and recognition since they have operated for years. This means that there is a proven demand for the products or services. Franchisors also provide initial training and ongoing guidance to help franchisees succeed.
With a proven system and brand already in place, the risk of business failure is generally low. By joining a franchise, you are also benefited by their preexisting marketing and advertising strategies. All this support is invaluable, especially for inexperienced first-timers.
The Cons of Joining a Franchise
Franchisees must pay an ongoing royalty fee on a percentage of revenues. They also have less independence and freedom since they must adhere to the franchisor’s systems and standards and systems. This also means less creative freedom; for instance, designing your unique logo isn’t an option.
Independent Business
An independent business is owned and operated solely by its proprietors. Following are the pros and cons of operating independently.
The Pros of Owning a Business
Starting an independent business provides the highest level of control and freedom. All revenue belongs entirely to the business owner rather than sharing any ongoing royalties. Independent business owners also have a sense of satisfaction that comes from building the business from the ground up.
The Cons of Owning a Business
In an independent business, you have to shoulder all the risks alone. You won’t have any continuous support from a franchisor. Independent businesses also have slower growth potential since building since establishing brand awareness and building a customer base takes more time from scratch. This results in greater inherent risk and uncertainty than a franchise.
Making the Right Choice
Ultimately, both franchising and independent businesses have advantages and disadvantages, so evaluating your circumstances is key. Franchising works best if you enjoy following a proven system and gaining knowledge from support. However, independence may suit you better if you’re highly innovative and self-motivated. You should also take your existing industry knowledge and experience into consideration.
Franchising can be ideal for breaking into an unfamiliar field using a tested model, while independence can be ideal if you already have experience and connections in your desired sector. You should also consider your financial resources and constraints. Projecting cash flows and profitability is another important evaluative step. Realistically model different scenarios under both structures. Finally, choose the option that best complements your overall goals.
Endnote
Taking the time now to carefully consider how each option of franchising or independent business ownership suits your own strengths and situation will help you choose the path most likely to lead to success. You have the power to choose, so choose wisely. Your entrepreneurial dreams can become a reality with hard work applied to the right opportunity for you.
