Buying a Business: Is Franchise or Independent the Best Choice?
The first big decision for new business owners.
Buying a business is a huge and potentially life-changing opportunity. It’s a new start and a big, exciting challenge. Before you jump in, there are some important decisions to be made!
One of the most prominent questions facing prospective business owners is this: should I buy a franchise or an independent business? There is no simple answer: each one presents unique advantages and hurdles. The best opportunity for you will depend on your goals, personality, and ability. The following are a few points to think about as you start the decision-making process.
Franchise
If you take the franchise route, the buck still stops with you: you are the owner, the operator, and the boss. However, many aspects of the brand, procedures, and products are already established and decided.
When you purchase a franchise, you are buying into an established model. The services or products have been tested and proved successful, usually many times over. You aren’t going in entirely blind—and that’s a big advantage for a first-time owner. Systems are in place that you can build on.
A franchise comes with brand recognition. Although it’s less tangible than many other business assets, your brand is one of the most crucial. Building this from the ground up can be a major challenge, and buying a franchise means getting a brand as part of the package—one that’s already out there and in people’s minds.
There’s a built-in network. Support is invaluable when it comes to business ownership. As a franchisee you have a strong network of people to ask for advice and guidance. What’s more, their experience and expertise are very relevant. Help you receive from franchisors and other owners is likely to be targeted, specific, and practical.
The reputation of your business will be tied up with others. This is not necessarily a bad thing, but it means you should pick your franchise carefully. You hold responsibility for the reputation collectively with other franchise owners.
Your control is limited. Although you are the owner of your franchise, you will be committing to guidelines that govern things such as pricing, products, territories of operation, aesthetics, and other decisions.
Fees are part of the package. There are plenty of advantages and support that come with a franchise, but you do pay for various things like ongoing training, marketing, a franchise fee, and other levies. This should be factored into your decision.
Independent business
Interested in an independent business,? As with a franchise, there are unique pros and cons to consider when making your choice. Here’s what you need to think about:
Fewer added costs. As the owner of an independent business, you don’t have to pay any fees or have any compulsory costs. This means you can decide where you prefer to invest your profits and can delay projects or launches until you feel financially ready.
You have the freedom to do what you want. All business decisions are yours entirely, from branding and design to supply chain and services. For many, this is the biggest advantage of an independent business.
There’s no roadmap. Buying an independent business is a big step. While the previous owner may offer some insight, there’s no guarantee of any ongoing guidance and practical help. Companies generally don’t come with instruction manuals, so you will have to write your own and create your own systems.
You won’t get an automatic village. It takes a village to raise a child, and the same can be said for nurturing a company. With your own independent business, you will have to seek out your networks and may have to pay for a coach or mentor.
There’s no right answer. If you like complete control, a franchise may not be the right choice for you. However, if you’re the kind of person who likes clear steps and instructions, this business model is probably perfect. For those who thrive on support and networking, a franchise offers unique benefits—but there are costs to factor in. If you enjoy design, you may want to create your own branding and aesthetic, in which case an independent business is the best option.
Buying a business is a major decision and warrants thorough research. Whatever you choose, you will have to put in a lot of hard yards to make it work. Don’t just do the math, because it’s about more than numbers (although they are very important). Carefully consider your own personality and ability so that you can choose the business model which will make you most likely to succeed.