Business 101: Franchise or Independent Business
Posted on March 18th, 2008
When you are prepared to run your own business, one question that you’ll have to ask yourself is whether you want to start an independent business or run a franchise. While this is largely an issue for brick-and-mortar businesses, it can also come into play when it comes to online businesses as well. In either case, there are both pros and cons to running an independent business, just as there are pros and cons to running a franchised business.
With a franchise, you are bound to the rules of the larger company. Your pricing and branding must adhere to the parent company’s standards and you do not have nearly as much flexibility when it comes to marketing and releasing new products. At the same time, this means that you don’t need to rack your brain for innovative and new ideas; this is done for you.
You also get to take advantage of pre-existing brand recognition in the marketplace. It could be easier to attract customers to a known name than it is to a new name. Good franchises have proven formulas and they have already moved beyond their growing pains. It’s a ready-made business and the key to your success will be in your management. It’s also notable, however, that you will have to pay a franchise fee each month for the privilege of using the name and the brand. Most aspects of the franchise agreement are non-negotiable.
By contrast, an independent business lets you run the company however you see fit. Adjust those prices, launch new products, set out with your own marketing plans. It is completely up to you. You are also free of any franchise fees, meaning all the profits belong to you and you alone. You are also able to source your products from whatever supplier you’d like. The potential success comes from your own creativity, innovation, and management.
On the down side, you will likely not have a pre-existing brand in the marketplace unless you are buying an established business. Businesses that already have a large customer base will cost considerably more and this is an up-front cost that some may not want to absorb. By contrast, it can take a lot of work to turnaround a cheaper (failing) business. Starting fresh is another alternative.
In the end, the ultimate decision lies solely on your shoulders. There are advantages and disadvantages to either choice, so weigh your options before hurling yourself into the world of business ownership.
Posted in Business Topics | 423 views
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