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When starting a business, is it better to go on your own or buy a franchise?

I am 44 years old. I have years of management experience and I am tired of working for other people so I am interested in starting a business. I don’t really know what to try or the best way to go about it. Any suggestions would be appreciated.

It may help you decide by understanding the pros and cons of franchising

Advantages:

– Your risk is reduced as you are buying into a proven system for operating the business and generating profits.
– Though there are substantial fees for buying in to an established major brand franchise such as McDonald’s or Subway, a newer and smaller franchise operation might cost you less initially than doing your own independent startup.
– The business support system is built in (e.g. training, financing, money management).
– The psychological support system is in place … you plug into a network of business owners facing the same daily challenges and problems.
– The marketing support system is established.
– The brand is already built – you plug in to its customer base.
– You get a group rate – to reduce the costs of supplies, inventory, equipment and even medical, dental and eye care.
– It’s easier to recruit good help
– Your opportunities for growth are better – successful brand franchises generate steady cash flow and banks are more willing to provide loans

Disadvantages

– It’s their company = your name will not be on the door or the signs
– It’s their product or service = you are selling a product or service that is created and controlled by the franchisor.
– It’s their system = you will have to do things the way the franchisor wants them done
– It’s not always cheaper = For a well established and successful brand, your startup costs might be considerably higher
– If you have low credit rating, it can be tought to get financing for even a small home based franchise
– You may have to pay up front and annually, too.
– You may not get all you want from the corporate office
– You will have to learn to go along to get along = there may be times when you feel more like an employee of the franchisor than a co-owner
– Cannibalization (profit eaters) = franchisors sometimes get so eager to keep growing that they allow franchisees to locate so close to one another that they cut into one another’s profits
– Success is not guaranteed in a franchise or any other business
– You will still need a lawyer and an accountant
– If things go bad for one franchisee in your group, it can hurt all the others


7 Responses to “When starting a business, is it better to go on your own or buy a franchise?”

  1. imisidro says:

    It may help you decide by understanding the pros and cons of franchising

    Advantages:

    – Your risk is reduced as you are buying into a proven system for operating the business and generating profits.
    – Though there are substantial fees for buying in to an established major brand franchise such as McDonald’s or Subway, a newer and smaller franchise operation might cost you less initially than doing your own independent startup.
    – The business support system is built in (e.g. training, financing, money management).
    – The psychological support system is in place … you plug into a network of business owners facing the same daily challenges and problems.
    – The marketing support system is established.
    – The brand is already built – you plug in to its customer base.
    – You get a group rate – to reduce the costs of supplies, inventory, equipment and even medical, dental and eye care.
    – It’s easier to recruit good help
    – Your opportunities for growth are better – successful brand franchises generate steady cash flow and banks are more willing to provide loans

    Disadvantages

    – It’s their company = your name will not be on the door or the signs
    – It’s their product or service = you are selling a product or service that is created and controlled by the franchisor.
    – It’s their system = you will have to do things the way the franchisor wants them done
    – It’s not always cheaper = For a well established and successful brand, your startup costs might be considerably higher
    – If you have low credit rating, it can be tought to get financing for even a small home based franchise
    – You may have to pay up front and annually, too.
    – You may not get all you want from the corporate office
    – You will have to learn to go along to get along = there may be times when you feel more like an employee of the franchisor than a co-owner
    – Cannibalization (profit eaters) = franchisors sometimes get so eager to keep growing that they allow franchisees to locate so close to one another that they cut into one another’s profits
    – Success is not guaranteed in a franchise or any other business
    – You will still need a lawyer and an accountant
    – If things go bad for one franchisee in your group, it can hurt all the others
    References :
    Pros and Cons of Franchising http://www.powerhomebiz.com/blog/2009/02/pros-and-cons-of-franchising.html

  2. double t says:

    if you buy a franchise then you are still an employee doing the same things you did for other people. if you start a home based business then you can set your own schedule like I do. but you have to have a product that will fill a need. and a company that has been around for a while, and good compensation as well as timing. if you do not have these then you will fail.
    References :

  3. edthespartan says:

    The first question is what type of business you want to consider operating. This should begin with an assessment of your current skills experience and expertise regarding different products, services or industries. If you’e worked sporting goodsretail your whole life, starting a business related to selling sporting goods makes a lot more sense than opening a dress shop or a day care center. Thehe start-up phase of a new business is absolutely NOT the time for on-the-job learning of a new product, service or industry. You’ll make too many costly mistakes that way.

    Once you know what you can do and would enjoy doing, you can better assess whether doing your own start-up vs. buying into a franchise is your best option.

    That having been said, I’m partial to helping my clients do their own start-ups: they have greater flexibility (a key strength of a small business) than franchises and lower overhead. But of course this should always be looked at on a case-by-case basis.
    References :
    I help people start their own small businesses. http://www.keeterconsulting.com

  4. kemperk says:

    are u in Panama or in the US?

    my peers offered good ideas.

    first and FOREMOST, seek out your passions!

    if you have none yet, then, find someone who wants to start a
    specific biz, and offer to work with them in a field that at
    least partially interests you; get your feet wet!!

    I will guide you also.

    no cost for limited free help
    40+ yrs exp
    References :
    biz teacher/consultant

  5. mrsixfive says:

    Panamana Nate:

    With the media telling us that our economy is heading for..or is that already in…a recession, it’s not a surprise to most that a lot of people, such as yourself, are looking for alternate ways of creating a secondary income, to help in those situations where one has more money going out (Iiving expenses, bills, credit cards, etc., etc.,) then they do coming in (a job)…or are just flat out getting tired of working for someone else and making that person or company ‘rich’, while you struggle to survive.

    This being said, I’ve found a blog online that outlines a viable and very legitimate way of creating extra money, outside of any job you may have and doesn’t require a lot of time. Best of all, you could easily utilize all that management experience you have, at the same time not needing any start-up capital to get the ball rolling.

    Check it out and see if it’s something that you might be interested in pursuing yourself.

    If not, then I hope you’re able to find something that you can enjoy doing and which will provide you with the type of monetary income you’re looking for.

    Hope this helps?
    References :
    http://how-to-earn-a-living-online.blogspot.com/

  6. mr pickle says:

    Even a franchise you work for someone else. Especially when you sign those monthly royalty checks and wonder what they have done for you. I would suggest buying a independently owned firm where the owner is wanting to retire. They not only can teach you the biz but also they will stay on while a solid transition takes place. Then again, you actually will be working for your employees, not yourself. lol!!
    References :

  7. Rich B says:

    Both options have advantages and disadvantages. Generally choosing to buy a franchise is the simpler option as much of the work usually needed when starting up a new business has already been done for you. The downside however is that you must share your profits and you don’t have complete control over how the business operates. If it is important that you do have full control then it would be better for you to start your own business.
    References :
    http://wok2go.co.uk/business-opportunities-franchise-vs-independent