Franchise Vs. Startup – Learn Which One’s Best for You

date icon 4 minutes to read date icon 27th July, 2021

Is a franchise a good way to start your business? This is a question that many aspiring entrepreneurs ask. Thankfully, we’ve got the answers for you right here. Keep reading to discover the benefits and drawbacks of both franchises and independent startups.

Buying a Franchise Vs. Starting a Business Pros and Cons

The Benefits

You should be aware that entrepreneurs who invest in a franchise experience a much higher rate of success than those who decide to start their own business. Why is this? It’s simply because if you choose to take a franchise opportunity and become a franchisee, you’ll be able to follow a tried and tested business model and you’ll inherit a long track record of success. As a result of this, you’ll face greatly reduced risk. Your parent company will be able to tell you precisely how to overcome the challenges in front of you. Plus, you’ll be able to quickly attract potential customers with your franchisor’s instantly recognisable name above your door.

On top of this, you’re likely to receive full training, as well as ongoing support with regards to marketing, operations and inventory. In addition, the majority of franchisors create teams for the sole purpose of supporting their franchisees whenever they require it. Simply put, you’ll be in business for yourself, but not by yourself.

The Drawbacks

It could be argued that the main drawback of buying into a franchise are the restrictions and stipulations included in the agreement. For instance, you’re likely to be assigned a specific, geographically defined territory containing a set amount of business opportunities. You wouldn’t be allowed to ply your trade outside of this area.

Moreover, it’s important to realise that you’d be expected to uphold the standards of your parent company at all times. Your franchisor would monitor your performance closely to ensure your full compliance. This would encompass how you use their branding, the products and services you offer and so on. You also shouldn’t forget that your franchisor will expect you to pay an initial franchise fee, as well as several ongoing monthly fees in exchange for the licence to use their name and intellectual property.

Another point often raised in the franchise vs. startup debate is that it can be very difficult and time-consuming to wade through the many franchise opportunities out there. These possibilities must be narrowed down to a list of viable options that match your skill-set and goals. This being said, you can get professional assistance. Learn why you should use a franchise consultant here.

Independent Startups

The Advantages

When it comes to buying a franchise vs. starting a business pros and cons, there are few greater advantages than the freedom you’ll find if you decide to start your own business. Got a specific product or service that you want to sell? It will be entirely up to you. Want to set up in a particular area and then expand? It’s your choice. Prefer to work from home? There won’t be anyone to tell you you can’t.

To summarise: the number of business opportunities you’ll be able to take is unlimited and you’ll have complete control. While all the profits you earn will be yours and yours alone.

The Disadvantages

For all intents and purposes, you’ll be on your own. If you’re unsure how to solve a problem, you’ll find yourself in a trial and error process as you gradually learn what works and what doesn’t. There won’t be training available for you. Furthermore, you’ll have no pre-established reputation meaning you’ll have to build it up slowly.

What’s more, while prospective franchisees will be able to get financial assistance relatively easily, as an independent owner, you won’t have this luxury. This is due to the fact that most startups fail within just five years, and consequently, money lenders will see your new venture as a risk.

Franchise Vs. Startup: In Conclusion

Many ambitious entrepreneurs choose to invest in a franchise over forming their own business. The restrictions that are put upon them are generally seen as a fair trade for the streamlined path to profitability that they’re able to enjoy. But for those who desire total independence as well as financial freedom, starting an independent business may be a preferable option. Only you can decide what best suits you.

Moving Forward

Once you’ve read our buying a franchise vs. starting a business pros and cons, you’ll be able to make an informed decision regarding your next step. But if you’re still undecided, read our list of things to consider before buying a franchise and then connect with Franchise Fame – you’ll get professional advice.