Buy or not buy into a franchise's success?

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This article unpacks the pros and cons of being part of a franchise network or starting your own business from scratch. Each have their realities, but both are business, investment and employment opportunities if done successfully.

Not everyone is suited to be a franchisee in the same breath not everyone has the aptitude to be an all-out entrepreneur and business owner. This article investigates the kind of business which may or may not be suited for you.

What(WHY) is a Franchise?

A franchise is a type of license that grants a franchisee access to a franchisor’s proprietary business knowledge, processes, and trademarks. Permitting the franchisee to sell a product or service under the franchisor’s business name in exchange for an initial start-up fee and annual licensing fees.

Advantages of a franchise network

Comprehensive operational training specific to the industry
Ongoing Technical support by the franchise head office
Joining an established brand with a pre-established customer base.
Buying into a tried and tested system which can meet a forecasted ROI, answering the question, “How long until a franchise makes you money?”

Supplier relationships are established and maintained by head office.
Acquiring funding for franchises is significantly easier than traditional businesses.

Disadvantages of a franchise network

As a franchisee you are partly limited to the franchise network’s business strategies and marketing tactics.
Successful franchise networks usually have a high price as an initial start-up fee. (to find out “how are franchises priced” here)

Franchises are often area bound and you are restricted to trade within your area
Possibility of the franchisor not upholding the brand’s reputation and service delivery, which can tarnish your branch.

What(WHY) is a start-up business

The term start-up refers to a company in the first stages of operations. Start-ups are founded by entrepreneurs who want to develop a product or service for which they believe there is demand. These companies generally start with high costs and limited revenue.

Advantages of a start-up business

As an owner of your own business, you can grow your business’s products and services without seeking permission from hierarchical structures.
Ability to change suppliers if you form new business relationships.
You have full creative freedom on your business’s look and feel, and the means you use to communicate it to your target market.
Start-ups have the potential to grow quickly and exponentially.

Disadvantages of a start-up business

High start-up costs with no guarantee of clients walking through your door.
Do not have business support which can assist in business management, leaving the owner to outsource skills at a higher cost compared to in-house staff.
Must find and develop relationships with suppliers.
Must develop business system through trial and error which takes time and resources.
Often the business owner sacrifices their income to make the business profitable.

Each type is an investment, business, and employment opportunity, but the risks attached are not equal. Evaluate your aptitude, goals, and resources before finalising your decision on which would be the best business for you. If a franchise network is your best fit, you can see tried and tested franchise networks at Franchise Network list or if turning your business into a franchise appeals to you, look into How to franchise my business.