There are many paths to securing the American Dream, and many of them involve business ownership. Whether you’re brought up in a family business to take over that business, or you climb the corporate ladder to a position of authority, or you strike out on your own as an entrepreneur, running a commercial enterprise looms large in the American’s dream of bettering him or herself.
If you’ve ever considered starting a business of your own, there are many initial choices available to you, and one of the first (and, most important) of these is whether to start something brand new and wholly your own or to buy into a franchise.
The pros and cons of franchising
There are numerous technical, legal, and practical factors to consider when discussing this question, but some of the most important are summed up as follows:
Pros of buying a franchise
- A franchise location offers an instantly recognizable brand and the simplicity of turnkey, duplicatable systems that have been proven to work.
- If you’re buying an existing location that has a poor reputation, rebranding it as a franchise location could provide instant improvement.
- Startup costs are generally higher to buy into a franchise bar, and ongoing franchise fees also eat into profit margin, so you’re relying on higher volume to make up for it.
Cons of buying a franchise
- An independent location offers greater freedom when it comes to things like choosing decor, product and service offerings, branding, theme, and how you market your business.
- Buying an independent location that’s already well established and enjoys a positive reputation and strong core of regular customers can be just as easy and safe as buying into a franchise, especially if you have experience in the industry.
- There’s a chance of higher profit margin in an independent location because no franchise fees or royalties are required.
- Additional Resource: If you’re an especially “glass-half-empty” kind of person, here’s an even more detailed explanation of all that’s wrong with buying a franchise.
Making this decision really comes down to personal preference, your comfort level with owning and operating the particular type of business in question, and the availability of independent and franchise locations in the area where you’re hoping to buy. In many cases, first-time owners find that paying the extra cost to operate a franchise pays off in the shorter learning curve and ease of operation.
But, when you really get down to the bottom line, the answer to whether or not a franchise is the best option needs to be asked differently:
Is buying a franchise right for you?
To assist in the soul-searching and practical self-examination needed to answer that question, here are 5 personal and professional traits that successful franchise owners share. Ask yourself if the following descriptions could apply to you.
- Less need for control. Entrepreneurs are notoriously control-hungry, and for good reason. However, franchise owners must accept from day one that the parent company retains a large amount of control in nearly every aspect of the business. Management, the hiring process, product and service selections, marketing… right down to the look and feel of the location. All of it is either fully or mostly controlled by the franchisor. Are you comfortable with that? Can you find fulfillment under those conditions?
- More averse to risk. Again, the stereotypical entrepreneur is willing to risk everything to accomplish their goals. And, even as a franchise owner, a reasonable level of risk is just part of owning a business. There’s no way around that. But, if your personality includes a higher aversion to risk than, say, someone like Richard Branson or Elon Musk, franchising may very well be the best option. Buying into an established brand and knowing you can rely on the support of a larger corporation can eliminate (or at least mitigate) a lot of the inherent risk that goes with striking out completely on your own.
- Hardworking. This should go without saying, but the life of a business owner is never going to be a lazy trip down a silent stream. It’s going to be rapids and waterfalls more often than not, and it’s always going to require effort. Hopefully, you weren’t considering buying a franchise with the impression that a franchise owner can sit back and watch this well-oiled machine run all day, every day. Successful franchise owners — like their independent counterparts — are extremely hardworking people.
- Willing and able to invest. Buying a franchise can often require more in upfront costs as well as ongoing operating expenses than buying or starting a comparable independent company. There are several reasons for this, including franchising fees, ongoing royalties to the franchisor, and requirements for upgrading, marketing, or other business details dictated by the franchise agreement that an independent owner could possibly avoid. Are you in a position to handle that higher investment in hopes of the higher returns that an established brand and proven duplicatable systems can offer?
- Eager to grow. Under the right circumstances, and with the right franchise, it’s often possible for franchise owners to expand their business more quickly and securely than owners of independent companies. This is because if the franchisor is impressed with your ability to run one location, they will often be eager to support expansion into a second, third, or more locations. Since the systems are duplicatable, successfully operating four identical locations will not likely take four times the time and effort, meaning you can grow revenue without burning yourself out. This isn’t as easy to do with an independent company.
So, do you have what it takes to succeed as a franchise owner? If the five traits above describe you, there’s no better time to start looking at what franchises are available and narrowing down the list to your own personal key to the American Dream!
So what are you waiting for? find your dream franchise today