INDEPENDENT BUSINESS or FRANCHISE BUSINESS

Many people dream of owning a business and see it as a way to control their own destiny. Starting a business is an exciting venture that offers many benefits. But starting a business is not an easy cup of tea it involves lot of risk. However, you should also analyse what it takes to run a successful business. Although no special skills are required, running a successful company takes determination, patience and an understanding of business principles. In a run of starting of their own many people get confused whether they should start from the scratch or they should by an existing business model and start as a franchise partner.

Franchise business offers several advantages over starting a business from scratch. It typically comes with an established customer base, unless you will move the business to a new location. Along with the established goods, you are also buying the background and the reputation of the company.

Should you buy an independent small business or a franchise?

Some buyers thrive as independent business owners, while others are more likely to prosper as franchise owners. In reality, there are no easy answers to the independent business versus franchise business model. Instead, you will need to carefully evaluate the factors that differentiate the two approaches, talk with your family and other trusted advisers, and decide which one is right for you.

OWNERSHIP:-

As an independent business owner, you’re your own boss. You can’t get fired. More importantly, you have the freedom to make the decisions that are beneficial to your own business success.

Unlike independent business owners, franchise owners don't have the freedom to change their products or services based on their personal desires or changing market conditions. The parent company makes the decisions about product lines and other variables. But in Franchise business, it offers the independence of small business ownership supported by the benefits of a big business network.

COST:-

Independent business owners are likely to have higher investment costs to setup and operate their business as they have to start from the scratch.

Whereas the franchise business owners have low investment costs but need to fulfill all the terms and conditions set up by the franchisor (or the parent company).

BRAND RECOGNITION:-

In the franchise business, the partner has the benefits to enjoy the brand recognition which has the value in the market. Whereas in independent business the owner does not have this advantage as they have to start from the scratch.

RISK INVOLVEMENT:-

Independent business involves the greater chance of failure as in independent business you have to start it from the scratch. But associating with an already running business as a franchise partner minimizes the risk.

To establish a business of your own involves many risks but in the franchise business, the parent company had gone through with that so they prevent you from those risks.

Variances in the success rates of franchisees and independent small businesses are debatable. There is no conclusive evidence that either approach improves or reduces your likelihood of success. As a business buyer, you need to evaluate each potential acquisition on its own merits. Both franchises and independent businesses fail every day, and, at the same time, people clearly have success with both models.

In making your decision, you have to ask yourself the following questions:

1.      Am I looking to call all of the shots?

2.      Am I comfortable playing by someone else’s rules?

Your answers to these two questions will help determine in which direction you should proceed.

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