For anyone dreaming of being in business for themselves, one of the first questions to answer is whether to start a business from scratch or invest in a franchise. While both models offer the opportunity to be your own boss, there are some key differences and pros and cons to both. For would be entrepreneurs, which is better? Franchising or a true startup?

Franchising Advantages

One of the biggest reasons to choose a franchise is to hit the ground running with a proven business concept that comes with systems and support. Franchising gives you the opportunity to be your own boss and grow a business without as much risk as with a startup. A franchise is a turnkey business that helps a franchisee avoid some of the pitfalls a startup would have.

Franchisees are part of a bigger business, which means access to better vendors, a stable supply chain and the support of the franchisor and other franchisees. Top franchises have very low failure rates compared to a startup.

Depending on the franchise chosen, franchisees can also benefit from brand recognition. Even with an emerging brand, concepts owned by celebrities like Duff’s CakeMix, JARS and Taffer’s Tavern enjoy more media attention and customer excitement when a new location opens.

A franchise gives an owner a chance to build their business using compounded returns from the initial store to open new locations. With an emerging brand, franchisees have a long runway of growth to parlay into wealth. Franchising also gives an owner a strong exit strategy, by selling a business that is well-known and established.

Franchising Disadvantages

To be a successful franchise you need to follow the systems the franchise has in place. If you’re dreaming of doing it your own way and see yourself as a Richard Branson or Elon Musk kind of entrepreneur, franchising isn’t for you. The franchisees that attain great wealth are those that keep pulling the same lever.

Depending on the brand, investing in a franchise can be expensive. Franchises require franchisees to have a certain net worth and franchisees need to factor in franchise fees, build-out costs and marketing fees.

Since your success is tied to the overall success of the brand, it’s important to research a prospective franchise before investing, or use a company like Fransmart, that offers vetted emerging franchise concepts.

Startup Advantages

For an entrepreneur with a big idea, the startup is the way to bring it to life. Bill Gates did it with Microsoft and Steve Jobs with Apple. The appeal of the startup is that you’re the boss in every sense of the word. You don’t have to follow anyone else’s systems; you’re creating your own. It’s your chance to build a better mousetrap.

Depending on the business, startup costs could be minimal and require much less initial investment than buying a franchise.

Startup Disadvantages

A startup isn’t for the faint of heart. You’ll shoulder more risk with this model than a franchise. Because you’re starting something from scratch, success is less assured than when you buy a location of an existing company. You need to have a personality that can tolerate risk and a bank account that will allow for lean times in the beginning.

With a startup you’ll need to be willing to wear many hats in the beginning and work long hours to make your dream a reality. Because your company is small and new, you may also encounter problems securing funding and creating a strong vendor network.

Ultimately, deciding between forging it on your own, or investing in a franchise is a personal decision based on many individual factors. If you’re interested in learning more about if franchising is right for you, contact Fransmart today.

Franchise With UsFranchise With Us