Why Buy A Franchise Rather Than An Independent Business?

on Mar 05, 2021 | 4203 views

Written by Nony Nema                                                                           February 5, 2021

Both franchising and independent businesses have their respective characters. While franchising involves the use of an already established and proven business model’s strategies, brand name, trademark, and operational tools, independent business involves the detailed process of making your mark in the market with the help of one’s finance, resources, and manpower. To differentiate the two approaches, and find the one which best suits you, you need to evaluate the features, pros, cons, and framework of both. To make it easy for you, here we at Franchise Bazar, have penned down some crucial points which you can consider before digging deep into the process further. Let’s have a look at them-

1. Ownership Model : 

From an ownership perspective, a franchise is very different than an independent business. In the case of independent business owners, they have the freedom to change their products and services based on their desires or the dynamic market conditions whereas this isn’t the case when it comes to a franchise. Mostly, the franchisor makes the decisions about product lines and related items. But on the other hand, independent business owners don't have the security of knowing that product lines, and other ownership decisions have already been tested and optimized for the marketplace. Although franchise owners sacrifice independence in decision-making, they enjoy the security and stability that comes from being a part of an organization with a proven track record.

2. Cost Structure :

Independent business usually goes through higher investment costs to buy and operate their business. Franchise business buyers generally have lower total investment costs but have to fulfill the obligations set by franchisors. 

3. Brand Recognition :

If the brand image of the particular franchise is good in the market then the buyer buying the franchise will automatically benefit from the franchise’s brand image. However, this might not be the case when one buys an independent business as he will be required to create the brand reputation in the market by himself. 

4. Financing :

There is a clear difference between the financing that’s involved with franchising vs. an independent business. You can start a company on a limited income but if you buy a franchise you need to pay the franchise fee and the initial costs involved in the setup.

5. Time Aspect :

The time taken into launching a Franchise vs. launching your own independent company is very different. With a franchise, as you get everything set up already, there is not much hassle. As an independent, you are starting from scratch which can be time-consuming, and take much longer than you expected.

  • Faster ROI

The return on investment can take a lot longer when you’re an independent business vs a franchise business. When you’re operating a franchise you generate revenues much easily. But when you’re an independent business owner, you have to work at developing awareness of your brand. 

  • Training and Support

 Franchisees receive comprehensive initial training from marketing to administration to customer service and compliance. Independent business individuals have to establish their training methods with generally no support network.

Here are some of the benefits that come with buying a franchise business-

  1. The franchise organization model offers the franchisee the ability to grow under a brand and share the advantages of a larger group of business owners. The franchisees share the mutual benefits of the organization through the support and encouragement of the franchisor.                                
  2.  A person buying a franchisee gets the benefit of proven trademarks, information,  and designs, and even training from successful business owners.                                                                                                           
  3. There is a lower risk of failure as compared to when you were to start your own business from scratch.                                                                               
  4. One gets Operational support from the franchisor, both before and after launching the business venture, in areas of financing, accounting, training, etc.                                                                                                                  
  5. One also benefits from the opportunity to enhance their managerial abilities and skills with the help of an established business model that one couldn’t have experienced when he would have gone with the option of an independent business.

Franchising offers better chances of Success

Government research over the years has indicated that the success rate for franchise-owned endeavors is significantly better than the rate for non-franchise-owned small businesses. Franchising makes up a significant part of the national economy and presents a statistically better chance for success as compared to other business options.

*3 Key Elements are looked upon before buying a franchise business:

  • Flexibility
  • Money
  • Status

Buying a franchise can provide you with all three of these elements along with the fact that you operate the business employing all the required efforts and manage your time and resources properly. A franchise allows you to go into business not only for yourself but for all the many individuals who lack confidence, business experience, or time, or whose skill set suits a team working environment. Franchising allows bigger businesses to grow while allowing people to run their businesses with the help and support of a larger company. However, before buying a franchise opportunity one should consider if their personality traits or experience would match the process of following the franchisor's rules and regulations. It’s also important to realize that joining a franchise network is not a total guarantee of business success as running a franchise takes consistent determination and effort. One aspect that assists a franchisee is that he has the advantage of the support of the franchisor.

Deciding between an Independent Business and a Franchise Unit

When you’re making the franchise vs independent business decision, make sure you carry out thorough research before you embark on a business venture. Take the time to investigate any franchise business that you’re interested in and then compare your findings and also, consult any legal, financial, and franchise experts if necessary, so that you can make an informed and beneficial decision for yourself.

Reasons to Consider Franchising-

  • It gives independence with guidance.

 Franchising is a great way to start a business when you want to work for yourself but have only a little idea of how to start it. 

  • It involves the benefits of a reputed name.

 It is a good way for entrepreneurs to start their businesses while still having the resources of a bigger company 

  • It's easier to get funding.

"The fact that the business plan and all financial projections are already done makes it much easier when applying for a loan. 

  • It's less risky than starting a business from scratch.

With a franchise, the risk of failure can be avoided to a larger extent because you have a tried and true system to fall back on. 

  • You have access to proper training.

Franchisors provide franchisees with training in all major areas of their new business and also stay by their side to help them stay on top of the business as it grows. 

Any Query?

Franchisebazar is here for you!

Get yourself registered at https://www.franchisebazar.com/entrepreneur-registration or call on 9844443200 for further help and inquiry.

 

 Tags:     #Low investment business franchise in India

             #New service business ideas in India

             #Top franchise business in India 

 

 

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