Like any other business, there’s a lot to consider when purchasing a franchise. Does starting your own business yield more long-term rewards, or is buying a franchise a better choice?
To find out, we asked eight founders from Young Entrepreneur Council (YEC) their thoughts on the subject. Here are their answers are below.
Q: I’m thinking about buying a franchise. What are the pros (or cons) of going into a franchise vs. starting my own business that I should be aware of?
1. Franchises lay the groundwork for you
Some of the most difficult parts of starting a business revolve around putting stakes in the ground for your brand, your business model, and even your culture. If you find a franchise you respect and admire, you can build from a strong base and simply add the accents to make it yours.
– Aaron Schwartz, Modify Watches
2. You may still have a strict boss
Many franchises have very restrictive rules on how you run your franchise—everything from the prices you charge to how you decorate your location. An advantage to buying into a franchise is they give you a playbook that is much more likely to be successful than if you started an independent business, but know that this playbook often comes with restrictions on how to run your business.
– Doug Bend, Bend Law Group, PC
3. You get the recognition of a big-name brand
You get the name recognition and authority of a big-name brand. This is something that takes millions to create. Every time a potential customer sees the branding for a franchise, you are getting the benefit (as long as the franchise has a good reputation). Smaller companies just cannot compete on this scale.
– Dave Nevogt, Hubstaff.com
4. There are heavy franchise costs, and little flexibility
Franchises are proven, safer models, but you can kiss flexibility goodbye. If you’re like most entrepreneurs, it won’t take you long before you find little faults in the model that you will want to fix, but can’t. Another issue is that the owners typically require a huge share in profit, and they always get their money before you do.
– Andy Karuza, Brandbuddee
5. Franchises hinder innovation
No matter the franchise, it’s almost inevitable that you’ll be asked to sign a franchise agreement, which lays out specific rules the franchisee must follow. While this can be helpful in establishing a framework, it can also stand in the way of innovation. Even if you have a great idea for the business, it’s possible the franchise agreement may hold you back from execution.
– Michael Parrish DuDell, Michael Parrish DuDell
6. You’re starting halfway through the race
Buying a franchise is like planting a sapling instead of a seed. The hard work of trial and error has already been done. If you are the creative type who likes to march to the beat of your own drum, you may want to start from scratch because a franchise has a proven system that must be followed to succeed.
– Nick Friedman, College Hunks Hauling Junk
7. Starting your own business may be more affordable
8. Franchises provide a framework for success
The biggest pro of going into a franchise is that you start off with a framework for success. The franchisor has developed a system that should make attaining profitability much easier than if you were to start from scratch. You may not have as much control, but the risk of failure is much smaller.
– Sarah Schupp, UniversityParent
Like this article? Please share it:
How LivePlan makes your business more successful
If you're writing a business plan, you're in luck. Online business planning software makes it easier than ever before to put together a business plan for your business.
As you'll see in a moment, LivePlan is more than just business plan software, though. It's a knowledgable guide combined with a professional designer coupled with a financial wizard. It'll help you get over the three most common business hurdles with ease.
Let's take a look at those common hurdles, and see how producing a top-notch business plan sets your business up for success.Click to continue