Should You Choose to Own A Franchise Business or a Start-up
Running a business is one way to be independent of the challenges and hierarchies of employment. Some advantages include having control of one’s working hours, creating your own workplace policies, and having the authority to choose which direction you want to follow in managing your business. However, when choosing to enter into the business industry, there are a lot of business models to choose from. With the advent of the internet, social media, and mobile smartphones, there are even online platforms are included. Each business type has its own advantages and disadvantages. Two of the most common ones are start-up businesses and franchising.
Investing in a Business Franchise
When thinking about franchise businesses, there are a lot of mainstream examples such as coffee shops like Starbucks and fast-food franchises like McDonald’s, Wendy’s, Burger King, Chipotle, and many more. Investing in a franchise business means that you are buying a company’s or franchisor’s rights to their name, business logo, and the model to their retail outlets. Franchise business investments begin with paying an initial fee to the franchisor in order to acquire the business rights, equipment needed, and the training of new employees who will work at the franchise site. Of course, depending on the premises i.e. renting or constructing a building, the site of the franchise would have to be prepared as well. When the business operation starts, the owner of the franchise is expected to pay royalties, calculated depending on the total amount of sales, to the franchisor on an agreed-upon basis such as monthly, quarterly, or yearly. Franchises have high success rates since the brand is most probably well-known to a lot of people already so, the consumer base of the business is secure. In addition to the timely fees to be paid to the franchisor, another disadvantage of franchise businesses is that owners have limited freedom in work policies, the products or services sold, and the decoration of the franchised premises.
Founding a Start-Up Business
Quite opposite to the franchise business type, startup models begin from scratch. It is entirely dependent on the business knowledge, decision-making skills, and creativity for innovation of the business founder or owner. The process of creating a start-up business is longer. It begins with developing a business idea that is inspired by the future owner’s motivations, passions, and interests. It might also originate from seeing an opportunity for business in a respective community. To get a feel of the success rate of the business, owners and investors are expected to conduct market research and feasibility studies generated from the feedback of target consumers. When the research and studies prove that the business is successful, the legal papers and requirements can now be processed. This includes the needed permits, licenses, business plan, and of course, the start-up funding for the business. In comparison to the franchise business model, start-up businesses are more open to creativity and innovation based on the direction of the business owner. Work policies, business brand, and the physical make of the business site are entirely up to the owner. Being in complete control of the business helps the founder or owner develop more in their professional growth as well. However, there are higher risks when it comes to the success or failure of the business.