Thinking About Buying a Franchise? Consider These Pros and Cons 0

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Is buying a franchise smarter than starting your own business?

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

Aaron SchwartzSome 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 SchwartzModify Watches

2. You may still have a strict boss
Doug BendMany 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 BendBend Law Group, PC

3. You get the recognition of a big-name brand

dave-nevogtYou 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 NevogtHubstaff.com

4. There are heavy franchise costs, and little flexibility 

Andy KaruzaFranchises 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 KaruzaBrandbuddee

5. Franchises hinder innovation 

Michael Parrish DudellNo 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 DuDellMichael Parrish DuDell

6. You’re starting halfway through the race 

Nick FriedmanBuying 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 FriedmanCollege Hunks Hauling Junk

7. Starting your own business may be more affordable 

Andrew SchrageThe cost of starting your own business will typically be less than buying a franchise. Plus, starting your own business may offer more flexibility.
– Andrew SchrageMoney Crashers Personal Finance

8. Franchises provide a framework for success

Sarah SchuppThe 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 SchuppUniversityParent

About the Author Scott Gerber is the founder of the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world's most promising young entrepreneurs. Follow Scott on Google+ Read more »

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