Entrepreneurship and Franchising - Which Is the better option for you?

on Apr 08, 2024 | 10334 views

Written By: Resham Daswani

Many people are finding being a business owner is a good fit for their job goals. Making money, being your boss, and experiencing all three can be an incredible ride. Achieving self-sufficiency can lead to many positive outcomes, including freedom, flexibility, and financial success. The spirit of entrepreneurship and franchising model are two such possibilities.

Before you decide to grow your business, it becomes relatively important to get clarity. Therefore, you need to be familiar with the terms "franchising" and "pure entrepreneurship" to better understand the business model.

Defining Entrepreneurship and Franchising - Here’s What You Need To Know

Franchising is a type of distribution and advertising in which a company allows another company to run a business, offer a service, or sell a product by using the franchisor's business system. Under specific conditions, the franchisor has authorised you to use their trademarks, branding, and identifiers.

Conversely, entrepreneurship is defined as taking calculated risks in the form of ideation, prototyping, and management of new business initiatives to create or derive value to make a profit. Decisions and the structure for running the business are yours to make as an entrepreneur.

Franchising vs Entrepreneurship - Which Could be the better option?

Though they have some commonalities, franchising and entrepreneurship are fundamentally different types of business concepts.  Here’s what differentiates them.

1. Autonomy is the structure of the business.

The franchisor is the one who will make the majority of the important decisions in the franchising business ownership model, particularly about the brand image and the services that are provided.

When you become a franchisee, you are not operating your business on your own. Nevertheless, you are still under self-employment. Also, you have an organisation to whom you may turn for direction and help.

The majority of the components of franchises have been experimented with and shown to be successful. However, some franchises allow for a significant amount of independence and innovation, even though franchising generally provides less room for experimentation and originality.

One of the business models in association with entrepreneurship is that of independent ownership. You will be responsible for establishing and experimenting with different tactics, as well as developing and tracking inventories and operational hours, among other responsibilities.

In short, either paradigm has the potential to be fruitful, depending on the individual.

2. Role of financing

It is common for the franchisor to have a significant role in supporting the firm in getting off the ground when it is being franchised. The franchisor might offer assistance with the selection of a location, the negotiation of leasing terms, the launch, and marketing. Typically, you will be required to pay a royalty charge to the franchisor every month in exchange for this help.

When you are an entrepreneur, you can determine the amount of resources you are willing to invest in the business as well as the timing of those investments. If you are an entrepreneur, you have the ability to reduce the scope of your services or postpone expansions.

On the other hand, because you do not have access to the assistance associated with franchising, it will take you more time and money to get your firm up and running and start doing well financially.

3. Understanding Brand Awareness & Marketing Strategies

By choosing to pursue franchising, you are making an investment in a business that is already well-established and well-known. As a consequence, the service and brand offerings that your potential customers are familiar with will be common.

Additionally, you are able to reduce the amount of money that you invest in marketing, advertising, and public relations. You are going to put in less effort in order to get individuals to enter your establishment.

There is no such privilege available to entrepreneurs. It is highly unlikely to begin with the same level of popularity or resources that you did in the beginning.

Developing your brand, gaining awareness, and establishing an identity in your community will require you to put in additional effort and resources. This is if you choose to pursue entrepreneurship.

4. Growth & Support.

Franchising is a better long-term strategy than starting a company from scratch. By purchasing a franchise, you gain access to backend assistance. This can serve as a stepping stone to the success of your future firm.

Because the franchisor has already completed the majority of the necessary work, you, as a franchisee, have the advantage of having a business plan that you can follow.  Significant progress in entrepreneurship necessitates perseverance, reliability, and a steep learning curve.

You, as an entrepreneur, can follow the guidance, concepts, and procedures of other companies. Therefore, you will need to have a comprehensive understanding of business as well as an efficient strategy to sustain organic growth.

Benefits of Franchising and Entrepreneurship in India

Though they both have similar concepts, here are some differentiating factors to help you make a perfect decision.

Advantages Of Franchising in India.

  1. Recognition of the Brand That Is Already Established: A well-known franchisor's established brand awareness and reputation can be used by individuals via franchising. For young business owners, this can cut down on the amount of time and energy needed to get their name out there.
  2. Successful Business Model: Franchisors provide franchisees a tried-and-true business model that has been successfully implemented and improved upon in a variety of commercial settings. Because franchisees gain an advantage from the franchisor's knowledge and skills, this lessens the risk of beginning a new firm.
  3. Easy accessible resources: Franchisors pool their resources, such as advertising campaigns, preferred supplier agreements, and bulk purchase discounts. Moreover, this is a benefit to franchisees. This may assist reduce operational costs and increase profitability.
  4. An easier way to acquire financing: It is possible that obtaining finance for a franchise firm will be less difficult than launching an independent endeavour. Moreover, banks and other financial institutions are typically more eager to lend money to franchisees. This is because franchised businesses have a proven track record.
  5. Comprehensive training and support: It is common practice for franchisors to provide franchisees and their employees with extensive vocational training programmes. The training in this involves instruction on several parts of running the business. This includes advertising, customer service, and operations. In addition, franchisors offer ongoing support to franchisees to assist them in achieving success.

Advantages Of Entrepreneurship in India.

  1. Freedom to pursue your own vision: The ability to pursue one's own ideas and vision is one of the benefits that individuals receive from entrepreneurship. Individuals who are entrepreneurs are in charge of their own businesses, which gives them the ability to make decisions on their own and determine their own destinations.
  2. Unlimited streams of income: The potential for earning an endless amount of money through entrepreneurship is unbounded. Entrepreneurs who are successful have the ability to establish firms that are extremely profitable and ultimately generate a considerable amount of money.
  3. More innovative opportunities: Entrepreneurs can shake up established industries by introducing ground-breaking new goods, services, or business methods. Businesses that are innovative tend to attract customers and investors, which can lead to tremendous growth and success.
  4. Crucial in job creation: In both the process of economic growth and the creation of new jobs, this is an essential component. Businesses by entrepreneurs result in the creation of employment possibilities for other people. Therefore, this in turn contributes to the expansion and prosperity of the economy.
  5. Offers the opportunity to create work-life balance: You get the freedom to strike a better balance between work and personal life. Self-employed people can determine their working hours and priorities. This enables them to devote more time to their families, pursue hobbies, or pursue travel opportunities.

Also Read: Top 100 Franchises in India for 2024

To Conclude,

Despite the numerous parallels between the two types of business models, there is no one strategy for business models that is universally applicable to both franchising and entrepreneurship.

When compared to other business ownership options, franchising is a more successful option. This is since it offers a multitude of benefits that significantly outweigh the potential hazards.  Call us at FranchiseBazar to understand franchising as the best option for you. Moreover, we can help you choose the right franchise business to start anywhere in India right away.

Disclaimer: The brands mentioned in this blog are the recommendations provided by the author. FranchiseBAZAR does not claim to work with these brands / represent them / or are associated with them in any manner. Investors and prospective franchisees are to do their own due diligence before investing in any franchise business at their own risk and discretion. FranchiseBAZAR or its Directors disclaim any liability or risks arising out of any transactions that may take place due to the information provided in this blog.

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