Buying a Franchise Versus a Business Opportunity

Many people decide to venture into the entrepreneurship world in order to find success and wealth. Starting your own business can be very intimidating, especially since there are numerous challenges and obstacles you’ll have to face. New entrepreneurs are often faced with two major options and those are to start their own business or choose a franchising option. Both options have their unique advantages and disadvantages, as well as unique challenges.

Choosing between the two comes down to personal choice and what you want to achieve as an entrepreneur. Starting your own business involves more risk but provides more freedom while franchising involves less risk but also less flexibility. In the end, the choice comes down to your personal preferences and what suits your needs the most. That being said, here are a few pros and cons of each option that might help you decide what’s best for you.

The pros of starting a business

As mentioned before, starting your own business involves more risks but it also provides more freedom of choice. As a business owner, you get to decide which business idea to run. You also get to decide on how to develop and grow your business further. That includes developing strategies on how to approach your customers, how to market your products or services, how to outrun your competitors and so on.

The freedom and flexibility you enjoy as a business owner is rewarding for all the hard work you put into your business. Not only that but you get to enjoy the fruit of your labor in the form of reputation, profits and success. Being their own boss is appealing to many entrepreneurs, which is why so many of them choose to start their own venture. With a franchising business, you get to enjoy similar benefits but not as much freedom as you’d like.

The pros of franchising business

Franchising is better suited for entrepreneurs who don’t want to risk too much or lack the resources required for starting their own business but would still like to run a business. With a franchise business, you’re part of a larger group that’s supported by a brand or a trademark, also called a franchisor. Depending on the franchisor, you get the support needed to start and run a business.

In essence, you have access to franchisor resources, such as funds, staff, training, marketing strategies, consumer base and so on. All you have to do is run a business and everything else is provided for. However, there are many franchising options to choose from, and you must take the time to understand how to choose a franchise in the first place. What’s more, you must buy your way into a franchise, which is often cheaper than starting your own business from grounds up.

The cons of starting a business

Starting your own business involves numerous challenges, risks and obstacles you must face and overcome, in order to succeed. The market nowadays is extremely competitive and overcrowded, which means you must be able to stand out from other competitors. The major issue entrepreneurs usually face when starting a business is finances. Aside from requiring a substantial capital to start a business, you must also have enough funds to keep it operational.

In addition, building a business from the ground up also means you must build your consumer base, develop your brand, design marketing campaigns, promote your business and so on. All of these efforts take time, money and effort to accomplish. What’s more, you must make all the decisions and you must be careful while doing so because even a simple mistake has the potential to ruin your business entirely. Not every entrepreneur has what it takes to endure everything regarding starting a business, which is why so many startups eventually fail.

The cons of franchising

Even though a franchising business involves a lot less risk than starting your own venture, it’s also far less flexible and it has unique disadvantages as well. Operating under a franchisor trademark involves rules, regulations and legally binding contract terms regarding running a business. In other words, you don’t get to make any important decisions regarding marketing, sales, pricing customers service and others, unless the contract says otherwise. Also, the reputation of the franchisor directly reflects on the reputation of your franchising business.

Moreover, you don’t get to grow or develop a franchise unless approved by the franchisor. In addition, a franchisor may choose to terminate a contract and force you out of business without previous notice or decide not to renew the contract after the first one expires. Furthermore, some franchising businesses cost more than starting your own business. With that in mind, a franchising business does provide more security and stability but you’re mostly dependant on the franchisor and the decisions they make.

Final Notes

Choosing to start your own business or go for a franchise is a calculated risk. Both options have pros and cons that are unique. However, the choice comes down to which one you prefer more and which one is better suited to your needs.