If you’re considering starting a business, you may be wondering whether it’s better to launch an independent business or buy into and open a franchise. Both have a whole range of advantages and disadvantages and both can lead to exciting and successful business ownership. But, whilst starting out it can be a huge challenge to decide which option is best for you.
Starting a business can be exciting and rewarding and once you’ve decided which type of business you’d like to get involved with this can feel like a huge weight has been lifted off your shoulders. Prior to this, it can feel like a stream of never-ending questions: Is buying into a franchise a good idea – or is an independent venture more financially sustainable? Ultimately, your decision will come down to the type of person you are and what sort of business venture appeals to you and the goals you have for the future. Be that working independently, having a healthier work/ life balance, or financial freedom. There are advantages and disadvantages to both business models, so you should consider their key differences before you decide which path to go down.
When you go into a franchise business, you’re buying into a system that has a proven business model, structured systems, ongoing support and marketing materials already in place, plus in many cases, an established brand to operate under meaning your name is already established and it is just up to you to build it within your area.
With an independent business, you’re starting off with a blank canvas and are left to figure everything out on your own, ideally as quickly as possible before your funds start to deplete.
Have a read of our post below as we weigh up the franchise vs independent business conundrum and take a closer look at the differences between running an independent business and a franchised business and which is the best option for you.
You might also find Should I join a franchise? interesting if you are considering this. Read it here.
What is an independent business?
Independent businesses are usually privately owned by one or a couple of people. Non-independent businesses include public limited companies, which are owned by investment shares traded in the stock market and therefore subject to the wishes of shareholders. An independent business is completely run by you (and whoever you choose to go into business with), giving you full control.
What is a franchise?
A franchise is a joint venture between a franchisor and a franchisee. It is a type of business that is owned and operated by an individual (franchisee) but that is branded and overseen by a much larger company (the franchisor).
Key Difference Between Operating a Franchise vs. an Independent Business
- A franchise offers a great deal of support and far more of a ‘safety net’ than an independent business. However, an independent business offers a far greater level of flexibility.
- A small independent business is much more exposed and fragile than a large franchise when it comes to competing with rivals.
- A franchise should have a detailed marketing strategy and far bigger buying power. They typically provide many common services to local franchises for a relatively low cost, services such as training, online retail, uniform, marketing materials, a website, etc.
- Running an independent business offers you complete freedom in terms of your branding and marketing as a whole plus, how you want your business to look and run whereas with a franchise you have to follow the pattern that has already been put in place.
Key advantages of running a franchise
- Franchises offer the independence of owning a small independent business however, you also have the support from a larger business that has more experience within that sector.
- You don’t need a lot of experience when starting up a franchise, as a lot of the training is provided to you.
- Franchises have a higher rate of success than start-up businesses.
- You may find it easier to secure finance for a franchise. Different franchise businesses naturally largely vary when it comes to financing them, however, the chances are it may cost less to buy a franchise than to start your own business.
- Franchises often have an established reputation and image, they can also offer you training, access to marketing materials and access to ongoing support in all parts of your business.
Key advantages of running an independent business
- Business owners have complete control of branding, marketing and how they want their business to look and feel.
- Business owners have full control of the services they are offering or products they are selling.
- There are no royalty payments or franchise fees to pay when starting a business – just be aware of the other fees which come about when starting a business.
Overall, there are huge, key differences between buying into a franchise and starting out running an independent business. Before deciding which business model to opt for decide which parts of the business are the most important to you, which parts you want control over and which parts you can relinquish control over. Also, look into financial investments that you may need.
You can find more information on running a BabyBallers franchise here.
