Starting a business is a complex process that involves marketing and upfront expenses. For many individuals, starting a franchise seems like a straight-forward path to a successful business. Franchise opportunities have been available for decades and can be highly recognizable companies.
Franchise vs. Independent Business
Starting an independent company and starting a franchise are similar ways of conducting business. In both scenarios, the business owner is their own boss with their own schedule. Owners can employ their own team and work in a physical location.
For new business owners, franchises are recommended because of their built-in blue print. This helps owners with marketing decisions and brand awareness. Independent businesses allow owners maximum control over their business, but do not provide working strategies that benefit the company.
Advantages of Franchising
One of the main advantages of owning a franchise is the assistance provided by the franchisor. Depending on the contract, a franchise comes with its own brand, equipment, advertising or marketing plan and additional supplies. Some franchisors are available by phone and will work closely with a new owner.
Brand recognition is key to building a reputation and steady clientele. Franchises are well-known businesses that have a built-in customer base. With less focus on marketing, franchise owners can concentrate their efforts on other aspects of the business.
Franchises are known to reach higher profit margins than independent businesses. This is due to their built-in customer base as well as existing structure.
Disadvantages of Franchising
There are a few disadvantages to owning a franchise. Business owners that run a franchise do not have as much control as independent businesses. This means the franchisor must be factored into decisions about business location, pricing, signage, products and decor.
Even smaller franchises require an initial cost. A typical low-cost franchise will still require a buyer to pay a few thousand dollars before ownership. For individuals who do not have the upfront fee, franchise financing options are available.
Owning a franchise does not provide full privacy. Financial decisions and accounts can be viewed by the franchisor. Before starting a franchise, talking with the franchisor and reviewing the overall business plan can help.
Profitable franchises are run all over the United States and abroad. With financing available, individuals are able to run a successful business with a built-in customer base. Franchises can help minimize risk to secure a steady income.