Franchise versus Startup: Which Should You Choose?

You have decided to be your own boss. There are two paths now ahead of you. Either you can start a business from scratch. Or you can buy a franchise. Many individuals face this difficult question when they want to start something of their own.

For instance, individuals looking to start a lawn maintenance business always face the question, “Should I invest in a lawn maintenance franchise?” or “Should I start a business of my own?” Similarly, people across various fields face the same dilemma. Don’t worry. To help such individuals, we have provided you with a detailed comparison of franchise and startup, highlighting the pros and cons of each. This will help you decide which one is right for your situation and personality.

Owning a Franchise

Owning a franchise seems the easier of the two options. You won’t have to do everything on your own to set up the business. Additionally, you can easily attract customers based on the business name whose franchise you wish to start. However, before making the final call, you should consider the following pros and cons of owning a franchise.

The Pros

Since the business is successful, it has expanded into multiple franchises, outsourced to capable individuals. Owning a franchise provides you an amazing opportunity of buying into this existing, successful business model. You have a turnkey business model waiting for you with open arms.

Additionally, A franchise name will carry a good reputation at a consumer level. You can benefit from that. You won’t need to put too much effort into attracting customers. They will be drawn to your franchise based on trust and brand reputation.

Lastly, franchises tend to be a safer option when compared to a startup. Thus, if you are a risk-averse individual, then a franchise proves to be a better option. There is a better return on investment and lower risk of the business going kaput.

The Cons

Purchasing a franchise can sometimes prove to be a costly affair than starting a business. The set-up costs can range anywhere from thousands to millions of dollars, depending upon the business, location, and other factors. Additionally, there are operations and maintenance fees that you need to consider on an ongoing basis.

Scandals, mishaps, and negative PR for the business can negatively impact your franchise without any fault of your own. For instance, Chick-fil-A franchise owners suffered losses due to the enterprise’s CEO comments on same-sex marriages.

Starting a Business

man working from home

If you have an idea, you can easily turn it into a business with the right strategy and business planning. You will truly be your own boss and run the business as you like. However, similar to a franchise, starting a business has its own sets of pros and cons. Let’s have a look at both in detail.

The Pros

Depending upon the type, the set-up costs can be as low as a few thousand dollars. Many businesses can be started from your home, the trunk of your car, or even your garage, like Apple. Thus, business is an excellent option for individuals who don’t have a huge capital to begin with. And if you work hard consistently one day, you might end up starting a franchise of your business.

The next biggest advantage is the freedom to make your own decisions. With a franchise, you have to follow the rules and directions established in the business model. But, as a business owner, you are free to make your own decisions.

The Cons

Most business owners start without a clear plan and goal. This is why twenty percent of the businesses don’t make it through the first year itself. You will have to figure everything out on your own. You alone will have to put in long working hours and make difficult decisions without guidance, support, or training.

You will also face a hard time attracting customers in the initial stages. Then, there will be competition from similar businesses, especially from well-known franchises. If your marketing, sales, and customer service are not up to the customer’s expectations, your business will go downhill and eventually need closure.

We hope that this blog helped you understand the benefits and disadvantages of each model. While a franchise may seem to be a better option for low-risk takers, business proves better for individuals with financial restrictions. Similarly, other factors prove one model better, as well as inferior, to the other. In the end, deciding whether a franchise or a business is right for you is a decision that only you can make.

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