Franchises: What Differentiates them from Businesses "From Scratch"?

. 7 min read
Franchises: What Differentiates them from Businesses "From Scratch"?

The moment you decide to leave that 9-to-5 job and be your own boss, you will be surrounded by endless questions. Searching the answers to all these questions and matching all the pieces of puzzles to establish your own business finally can indeed be an arduous task. Of course, there will be a sense of freedom in developing your own norms and regulations, setting up working hours, and so on. At the same time, you will be anxious as you are entering into an un-chartered territory, where there is no surety if your business will succeed at all or not.

Commencing with a business venture can indeed be unnerving. But there are options which one can choose as per their comfort level. One can either start from scratch and decide to work out everything about their business or take up a huge brand franchise and enjoy a smooth sailing towards success and growth.

A franchise gives you facts, data, figures, marketing strategy, advertisements, and so on. But when you are on your own, there will be multiple unknown variables that you alone will have to face and handle. Both forms of business have some benefits as well as shortcomings. They vary from each other in multiple ways.

Franchising vs Non-franchising

Check out some of the significant differences that you ought to know about franchising and non-franchising business:

  • Decision-making and control: If you are a budding entrepreneur who loves to take complete control over his business and decide every single thing by yourself, the franchise model of business is not meant for you. Owning a franchise means you need to propel towards growth and success by applying the already existing franchise model backed by proven strategies, successful research works, and a booming sales system.
  • Brand awareness: Being a part of a franchise model means that the already existing brand name will guide you. People are already aware of the famous brand name, and you are just a part of the already successful business model. However, when you set up your own business, you need to put in a lot of struggle, hard work, and intelligent work to bring forth your brand in front of the world and make it popular among your target audience.
  • Equipment and supplies: An independent entrepreneur needs to do all the research work. He has to search for the best price without compromising the quality of equipment, supplies, etc. An independent owner cannot bargain much in the market. On the other hand, the primary benefits of franchise business are the power to get the best suppliers, negotiate conveniently because of the established brand name, and so on.
training word focused with magnifying glass on white background
  • Training and support: Franchises always offer proper training and support systems. But when you are on your own, you need to hone up your skills all by yourself. There will be none to guide you. You alone can train yourself and move towards a better self.
  • Return on investments: An independent business needs to wait for a stable and profitable ROI. But in the case of a franchise model, your target customers already know the brand you are associated with. Hence your ROI will be higher and better.
  • Service/Product innovation: When you try to launch your product or offer a service, it takes a lot of effort, dedication, time, and investment. However, a franchise model always backs you up with marketing strategies, advertisement tactics, performance, and delivery details.
  • Site selection: Get ready to deal with nagging landlords, real estate agents, and endless paperwork when starting your own business. Selecting a site all by yourself can be quite difficult. On the other hand, a franchise model does all the research work for you and offers you the best location for your business.

Advantages of Franchising

Have a peek into what advantages can franchising offer your business:

  • Business assistance: One of the benefits of franchise business is that you receive ample business support from the franchisor. Depending on the contract and agreement, you may be provided with the brand name, supplies, equipment, advertising plan, and much more. You will get the knowledge, tips, and tricks, and hacks to expand your business. You need not start from scratch and will get access to all the necessary support and amenities.
  • Lower rate of failure: Solo businesses experience a higher failure rate as compared to franchise models. By joining an already successful brand, you are ensuring your success. You already know that your franchisor's services and products have a mass following and acceptance. Thus the chances of failure in the franchise business are quite low.
  • Built-in customer base: When you start a new business independently, you will realize that it takes a lot of struggle to find customers. You will have to put in lots of effort and struggles to reach out to your target customers. However, in the case of a franchise model, you will get instant brand recognition exposure. There will already be a loyal customer base ready for you who have been impressed by the franchisor's services and products.
  • Efficient growth: When you commence with your first business unit, things do take time to get processed. It almost seems impossible to increase and develop in a small time-span. However, buying a franchise can help you in sharing that burden with your franchisor. Your chances of growth enhance, and the rate of growth also gets swift and better.
two businessman shaking hand

Disadvantages of Franchising

In a few circumstances, franchising also comes with a set of few cons or disadvantages. It includes:

  • Restricting regulations and norms: One cannot take his/her own decisions and need to follow the franchisor's rules and regulations. You will always have to abide by the restrictive regulations mentioned in the agreement.
  • Chances of conflict: If there is an imbalance of power, there is a high risk of parties getting into arguments. It is quite possible to enter into a legal battle because of issues like a clash of opinions, minimal support, etc.
  • No financial privacy: There will be no financial privacy at all. It is most likely that the franchisor will keep a check on the franchisee's entire financial ecosystem.

Thus, we can see that a franchise model of business has both advantages as well as disadvantages. It is absolutely up to the mindset, situation, ideas, and calibre of an entrepreneur whether he wishes to go for a franchising model or start his business empire from scratch.

Also Read:

1) How Does the Franchise Model Work?
2) How To Start Your Own Franchise?
3) Things You Need About Franchise Business In India
4) OkCredit: All you need to know about OkCredit & how it works.


Q. What are the best franchise business options nowadays?

Ans. If you wish to make it big as an entrepreneur, you need to follow your heart and invest your time, money, and efforts in something you love. Whether you are a doting foodie, a passionate fitness enthusiast, or a grooming specialist, take the plunge with an industry that matches your wavelength and supports something you like.

At present, the two best franchises to own are the health and fitness sector and fast-food outlets. You can be 200% sure about your success rate if you join any trending franchise models. Just make sure you are delivering your bit completely.

Q. How much money do I need to invest in buying a franchise?

Ans. It entirely depends on the franchisor you are eyeing. Know that the investment requirements and other related expenses vary exceedingly depending upon the industry and the type of business. It may start from a few thousand dollars and go as high as a million dollars. Several factors decide upon the full and final investment expenses, like the size or location of the business, level of training and support system, basic amenities and supplies, etc. The higher the benefits a franchisor offers, the greater will be the investment requirement.

Q. What are the various factors that I should consider before investing in a franchisor?

Ans. Keep in mind the below-given factors in owning the best franchise business:

  • The investment expenditure required for buying the franchisee
  • The type of background, exposure, and experience you need to enter the specific franchise model
  • The performance of other franchisors in the same ecosystem
  • The number of hours as well as personal commitment you need to put in to run the franchise
  • The products or supplies which you need to buy from your franchisor.
  • The performance track of the franchisor
  • The terms and conditions for conducting the renewal or termination of the franchisee