Franchisee vs Own Business

When any entrepreneur considers business opportunities, first thought that might cross their mind is should it be their own business or purchasing a franchisee. There is lot of brainstorming required before you come to a conclusion. This is because of the factors being weighed between an own business and purchasing a Franchise. You have to take into account your Business Experience, level of risk you can take and last but not the least financial considerations. Below I attempted to give a few pros and cons of both types of businesses.

Own Business:

PROS:

• The very thought of having an own business is very exciting because of the autonomy it gives along with a complete freedom to implement your ideas and goals. You can work towards your vision and building a reputation of your own.

• Own businesses might not always require a huge capital to start with because it can be started small and can be grown gradually over a period of time.

• There might be a huge competition in your chosen area of business where your competitors are hungry trying to maximize their market share. You have to be hungrier than them to sustain. Doing so in a long run will give a satisfaction of running your business against all those odds.

• Financial Wealth, brand recognition and reputation in the society goes without saying for a successful own business owner.

CONS:

• Failure rate of own business is much higher when compared to buying a franchise.

• Having no Boss might not really be true because your clients and customers are your Boss and they can be many times worse than the worst boss you ever had.

• There might be no schedule for the business owner but he need not have a schedule when he is working 24/7/365. This might be the case atleast for the first few years until the business stabilizes and a brand is established.

• You have to take unpredictable income for few years or worst may be risk of losses in terms of paying back creditors and other financial partners.

Purchasing a Franchise:

PROS:

• First and foremost advantage of Franchise is the success rate. Success rate of Franchise is far better than having an own business.

• You have customers who know your product even before you would have started, hence if the sales are good you might start making profits in a short time.

• Financial institutions would be ready to provide loans in most cases as they prefer Businesses already in operation.

• You always have Franchise support also can seek help and advice from the franchise community. You have a brand recognition from day one of your business operation.

CONS:

• Biggest drawbacks of purchasing a franchise would be paying the initial setup fees and also ongoing royalty for the rights to use the franchised system.

• Less freedom in terms of operation. You would not have any option of implementing your ideas or thoughts. You would have limitations on everything like what products or services you sell, advertising content and even the store furnishings.

• You might have a locking period with the Franchiser irrespective of whether you are doing good business or not.

• Though Franchise reduces the risk considerably but does not eliminate it altogether. Business success largely depends upon the efforts and willpower of the franchiser, which in no means is guaranteed.

Having said all these inarguably franchise companies carry great potential for success with distinctive disadvantages. Own business can be way to go if you are person who enjoy challenges at all levels and ready to work smart and hard. If you manage to run your own business successfully for longer period then definitely it could be the best choice you would have made in the past.

Go through my previous posts on entrepreneurship for more related information.

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