Franchise Versus Start Up: Which is Best For You?

Note: This blog post is a sponsored conversation written by Lynn Smythe, the Founder and Chief Blogger for The Creative Cottage lifestyle blog. The opinions, thoughts, ideas and text are all mine.

Have you made the decision that you want to run your own business but aren’t sure where to start? The idea of running a business and being your own boss is certainly an appealing idea for many people. Now it’s time for the tricky part; trying to decide what type of business you should run: franchise or start up. Unless you have a strong passion for a particular industry or for a specific type of product/service, it can be hard to decide exactly what business you should be running. However, you may be one of those people that knows that you need the challenge and the autonomy of being in charge.

If you are undecided about the type of business you would like to run, then you may be considering starting your own franchise. When you buy a franchise, essentially you are buying into an existing business model that is already established. In contrast when choosing a startup, it’s all up to you to come up with the business model, etc. Franchises are available in a vast range of industries from fast food restaurants to kids activity clubs.

While both startups and franchises enable you to run a business, there are vast differences between how they work. This means that some people may be well-suited to running a franchise, while others are much better going it entirely alone and starting from scratch. Popular franchise opportunities include McDonalds, UPS Store, Planet Fitness, 7-Eleven, ACE Hardware, Re Max and more.

Photo by Brooke Lark on Unsplash

Getting Started

One of the main differences between launching a startup and buying a franchise comes at the very beginning of your journey into the life of a business owner. Here are some of the main differences for comparison, see which of these sounds more appealing to you:

Launching a Startup

You decide on the type of business you want to run, along with what products/services you will provide.

You write your own business plan and calculate your startup costs. It is up to you to get your business launched and to build awareness of your business and what you do.

Buying a Franchise

You will need to raise the cash necessary to buy into the franchise.

Your business will use the branding of the franchisor’s business, rather than creating your own.

You are likely to be offered guidance on how to set up your franchise in terms of finding the right business premises, decorating and furnishing it.

You will probably receive training on how the franchisor likes their franchisees to run their businesses, such as policies and procedures.

Being the Boss of Your Startup

When you have launched a startup, you are in the driving seat, and each and every decision you make is down to you.

You will decide how much of your own money that you want to put into the business and how it is spent.

As well as deciding on the big decisions and day to day running of your business, you will also decide on the branding yourself and how you want the company to be marketed.

Running a Franchise

Typically, as a franchisee, you will be required to pay specific amounts of the money you make to the franchisor in the form of royalties. You may also need to pay out money for other costs in addition to the money spent purchasing the franchise initially.

You will probably need to run your business following the franchisor’s policies and procedures, and this could also include matters such as recruiting and training staff, as well as, which suppliers you need to use.

As a franchise is all about you operating your business under an established trademark and brand, you will need to keep in line with this and may receive branding guidelines to follow. Following these established guidelines helps the franchisor to protect their brand, and is an essential way of maintaining standards and consistencies throughout the network of franchisees.

Running a franchise often requires a different kind of marketing approach than you would take if you were running other businesses. For this reason, a different strategy is usually used for franchise marketing to achieve success.

Image credit Pixabay

Franchise or Startup, Deciding Which is the Right Choice

As you will see, while both franchises and startups allow you to run your own business, there are significant differences in the approach that you would take to do this. There are lots of factors to consider when choosing which option is the right one for you, but they mainly come down to your personality.

You may prefer to launch a startup if:

You prefer to be independent and have complete control.

You are an ideas person and like to be creative.

You would rather start from scratch with your own way of doing things than follow set policies and procedures.

You have strong ideas about the products and services that you want to sell.

You would like to build up your own brand and steer it in your direction.

You may prefer to buy a franchise if:

You are struggling to find a business idea to start from scratch.

You would rather buy into a proven idea than trying to launch a business idea of your own.

You would rather receive training and guidance than go it alone.

You like the idea of being part of a big, well-established brand.

You would feel more confident following set policies and procedures on how to run your business.

You would like to receive guidance on how to make a success of your business, and be a part of something bigger, where advice is readily available to you.

As you can see the decision on whether to run a franchise or launch your own startup can be a difficult one to make and depends on the amount of cash you would like to spend, as well as how you prefer to work. Essentially, both options can bring significant success, so it is down to which of the two best suit your personality, and whether you prefer the back-end support of buying into a bigger brand, or the freedom of going it alone.