Starting your first business can be both a very exciting and stressful experience. There are many factors that you’ll want to consider and so it is very important to put together the most comprehensive and well thought-out business plan that you can. You will want to consult with some experts in their respective fields so that you can be best prepared to run your own company.
One of the questions that you will need to answer very early on is whether you want to start up under your own brand name or if you should consider purchasing a franchise. There are certainly advantages and disadvantages to either choice, so let’s have a quick look at what you can expect from franchising.
Pros:
- Instantly recognizable name in the marketplace
- Pre-existing relationship with suppliers, manufacturers, wholesalers, and distributors
- Established product and service line
- Support from the parent company
- Possibly exclusive rights to a certain geographic area
Cons
- Upfront franchise fee increases startup costs
- Ongoing royalties must be paid to parent company
- Possible restrictions in choosing suppliers and distributors
- Likely restrictions in what you can do in terms of products and promotions
- Less flexibility in overall business practices
Choosing between an independent and a franchised business will also depend largely on your industry. Opening a restaurant with an established name, for example, may make it easier to acquire new customers but it likely will not garner the same excitement as a new and innovative startup. The franchise will feel “safe” to some customers, but the new name will feel “fresh” to others. You will need to consider your demographics and other factors before making this kind of decision.
