Franchising vs. Startups: Pros and Cons to Consider
In 2008, when Madeline and I launched our first business the idea of Franchising did not even cross our mind. In fact, the business we were launching was relatively new concept and a franchise model was not available. We had a plan, knew the product, understood the commitment and service levels required and went for it. In 2017, when we decided to take the next step down the entrepreneurial path, we looked at an industry where franchising was more of an option. In the end we decided to launch from start up after evaluating some key things about us and the franchise model. Our next two ventures we did go down the Franchise path as we wanted something not easier but already with a playbook. Thru these experiences we learned the following.
Franchising or starting an independent business are both viable options to consider when launching a new business venture. Both options come with unique advantages and disadvantages that must be weighed carefully before deciding.
When franchising, you will benefit from the established brand recognition and operational support of the franchise system. It is also usually much easier than starting an independent business as you won’t need to develop your own systems, procedures, and marketing strategy. However, you will have to pay franchise fees and royalties that can be costly. Additionally, franchisors tend to have strict rules regarding how the business should be run which can limit your ability to make decisions freely. It is also important that not all franchise systems even if in the same industry run the same. One of the most important things to look at is the leadership of the company. Franchisors will use the line You are in business for yourself not by yourself. This is important because if you do not make the right decision, you could have a partner that is not necessarily the on you want to be in
Starting an independent business is a more time-consuming and expensive option but it also gives you more freedom in terms of running the business. You can fully customize every aspect of your business to suit your needs without having to follow someone else’s rules or regulations. You will also gain full control over any profits or losses generated by the venture since there are no set franchise fees or royalties to pay. However, the downside is that you must be able to create your own operational systems and marketing strategy in order to succeed.
Ultimately, when deciding whether to franchise or start an independent business venture, it’s important for you to carefully consider the pros and cons of each option before making a final decision. Think about what type of business you want to run, how much control you want over it, and what kind of lifestyle would come with running either one. By taking the time to properly weigh all options available, you will be able to make an informed choice that best suits your needs and goals. Good luck!