Franchising vs. Starting a Business from Scratch

Starting any business requires a tremendous amount of decision-making. One common dilemma Starting a Businesspeople face is whether to go with the franchising route or to start a business from scratch. It is a serious consideration, since your decision could ultimately lead to the success or failure of your new business.

The answer to this question depends largely on your business goals; whether you’re offering a product or service, and overall commitment and investment you’re willing to make. There are pros and cons to both options, which is why it’s important to weigh your options carefully before making a decision.

When to Choose Franchising

Franchising is a turnkey business, which removes all the guess work and trial-and-errors from setting up and running your brand-new business. In general, a franchise is best for people with:

  • Extra money beyond initial investment – When you find a franchise, you’re going to pay the initial franchise fee upfront. Then once operation begins, you’ll still have to set aside payment for ongoing franchise royalties.
  • No business background – Most franchisors assist franchisees with everything from finding a location, training the staff, providing suppliers, setting up the store, and even marketing your products. For those without a business background, this is a huge help.
  • No control issues – Franchising doesn’t offer franchisees much control over the business model, product offering and branding. If you want any aspect of the business changed, you’d have to seek approval from the franchisor.

If you choose this route, you must be ready for risks attached to franchising. For example, bad press from another branch, even if it is worlds away from your franchise location, could affect sales of your business negatively.

When to Choose a Startup

Building a business from scratch involves a plethora of steps, from market research to product sourcing or manufacturing, marketing and branding, training employees, inventory, and a whole lot more. The main advantage of going this route is that you’ll receive 100% of sales and have total control every step of the way. This method is ideal for people who are:

  • Risk-takers – Franchising requires a franchisee to take a risk once when signing the franchise contract, and then have to work on the entire business all the way through. When you’re starting a business from scratch, you’ll be faced with a lot of decisions wherein you’d have to consider the risks and benefits of every option. And because you’ll have plenty of trial-and-errors operating a business without a proven system, it could be costly in terms of finances, time and effort.
  • Hands-on – The majority of businesses that start from scratch and have reached success are led by owners who are hands-on. You’ll need to be front and center every step of the way.
  • Easy to adapt – Change is inevitable at the start of every business. You’ll have to change what doesn’t work and adapt quickly to avoid losses.

The risks of this route are plenty, but building a business with total control can be challenging, yet fulfilling.

Whichever route you take, it is important to perform market research and see if the franchise or business idea would work within your geographic location and target audience. It’s also best to seek advice from professionals who could guide you with the important aspects of starting a business.

At National Franchise Business Solutions, we take an object and even-handed approach to helping entrepreneurs get into a business they will be successful with. We work with over 600 franchise brands across a wide range of industries, and through a multi-step process, we are able to help you identify the business model that best fits your passion, skills, and budget. And if you find that franchising is not right for you and you would rather start a business from scratch or retain the security of working for someone else, that’s perfectly fine too. We’re here to help you in any way we can so you can find the business or career that best fits your passion, skills, and budget.

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