Open a Business or Operate a Franchise: Advantages and Disadvantages of Each

Back to blogPosted by Melissa SchumannPosted on Entrepreneurs & Start Ups, Operations & Processes

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When opening a business there are usually two main options to choose from: one could create their own business completely from scratch or operate a franchised business. Both of these choices are great but each has its own advantages and disadvantages. Let’s compare:

Franchising

Advantage: With a franchise, it’s almost a guarantee success because of brand recognition alone. People recognize and know what to expect of the brand and are more likely to become a customer making your success rate much higher than that of a startup. A franchise also comes with the standards and procedures that are already in place which means this huge step is done for you and you will waste less time in figures out what works for the business and what won’t.
Disadvantage: Fees. When you open a franchise there are start-up fees and there are on-going franchise fees you will continue to pay throughout the duration of the operation. Also, there is little to no freedom with having a franchise. You may not get to decide the hours of operation, products, the dress code, procedures, or interview and training processes. All of these decisions are put in place and must be followed and products can’t be changed or modified in any way.

Owning A Business

Advantage: Total creative freedom. With owning a business you have complete say in products, hours, practices and other things like what your business will look like both inside and out. You don’t have to report to anyone and you can make changes to any product or take something out of the equation to make it better work for you and the business. If you need to adjust the hours or run a certain promotion you have complete freedom to do this.
Disadvantage: With opening your own business, you have a much lower success rate compared to that of a franchise. Also, not having the strong financial backing that comes with a brand can mean you could lose so much more. Since the brand and business is all new you will have to work harder to get your name recognized.

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