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Franchising vs Starting on Your Own

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  • #16
    Re: Franchising vs Starting on Your Own

    Some franchising is not as expensive as you would think. It often depends heavily on how long the franchising has been going on. Regardless, please don't be mistaken, just because you're buying into a franchise does not mean that it is automatically going to be a success or you're not going to ever go out of business. While name recognition and a proven business model are something you get for your franchising fee, there are no guarantees in business.

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    • #17
      Re: Franchising vs Starting on Your Own

      I'm biased towards starting on your own instead of franchising since I am the kind of person that likes to start everything from zero. But I'm aware It will take longer and business experience is required to ensure some safety in achieving the goals of your own developing franchise. I believe there are not obligatory rules to follow in order to running a successful business franchise, but certainly there are some aspects that you should avoid and usually these only become obvious after building some experience.

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      • #18
        Re: Franchising vs Starting on Your Own

        The decision of whether to franchise or to start your own business may be dependent on the environment and the available opportunities. Frankly, If I am in an area where a franchise like KFC would do well and I was able to obtain the franchise, I would grab the franchise opportunity as opposed to starting my own business because I would be getting a ready-made opportunity with the accompanying goodwill that it comes with, therefore, there is where my interest would be.

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        • #19
          Re: Franchising vs Starting on Your Own

          Originally posted by hades_leae
          I believe in taking the build your own route. I know that franchises are easier to get off of the ground, but like you said, it cost more. Some franchises businesses don't even turn a profit for years to come. I don't like knowing that, so I'd rather just build my business from the ground up.

          If I really wanted to assure myself that I will succeed, then before starting my business, I would make sure that I have everything covered so I don't have to worry about problems that might occur in the future.
          But that's also one of the incentives of starting a franchise as opposed to setting yourself up, and even if the business doesn't turn a profit then you know that you will still get paid and as long as your franchise is turning over some sort of business and the potential to make a profit in the future is there then you will be allowed some leeway and won't be under as much pressure as if the business as your's.

          That isn't a reason to choose a franchise over your own business of course, but if you want a start up with a bit less pressure it's certainly a factor that's worth considering.

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          • #20
            Re: Franchising vs Starting on Your Own

            Originally posted by djordjem87 View Post
            That is true but it really depends on your location. You do not have much chances to buy a franchise here in Serbia. It is a small market and and those old stores hold the monopoly quite well. I had a fast food restaurant on my on, from scratch and it was very good but the longer the period of assimilation to the market and terms of everything concerning this business the harder it was for me to survive without getting into some debts so I closed because I calculated I would be better off. The smaller the market the harder is to buy a franchise that will be lucrative in some reasonable time.
            What about the stuff like Starbucks, McDonals's, Subway and other similar services?

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            • #21
              Re: Franchising vs Starting on Your Own

              Originally posted by gracer View Post
              I have always read from experienced business people that franchising is the best way to enter the business world if one has no experience in doing business. Inventories and other important stuff are well taken cared off because franchises already have a tried and tested system that a franchisee only has to follow. The investment cost is higher compared to starting on your own though. What do you guys think about franchising versus starting a business on your own?
              True but also especially true for rich people/rentier-type who want additional income streams, good investment opportunities without having to spend a lot of time to manage it and learn the trade. Say if you want to open Pizza store it is much quicker to start with a franchise and benefit from their business processes, established supply chain, management methods and reputation than to do it on your own and spend 10 yrs in learning how to make Pizza and build a reputation for yourself.

              Most people may also think of food chains when franchise is mentioned, and in reality it is much more than that. Today you can buy a franchise and become a dealer for almost anything: insurance, telecom, cars etc. it is definitely more capital intensive than bootstrapping a startup for yourself, but think about this: it is a better deal to buy yourself a franchise than to, say, pay $60k for an MBA. You're going to be making much more money as a franchised store/restaurant owner than as an employee with an MBA, with the added benefit that you get to manage your time and "be a boss".

              So definitely don't reinvent the wheel and think of a franchise before you invest in that good idea you may have. There are today franchises as low as $5,000 (recently saw a CNBC article about that, althoug I wouldn't recommend very cheap franchises), and in some rather unexpected (and profitable) sectors.

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              • #22
                Re: Franchising vs Starting on Your Own

                While it is true that a franchise in itself does not guarantee success, we can say that by choosing the franchise properly, your possibility of failure is much lower than it could be if you were to open and operate an independent business on your own as a real-world learning experience.

                Of course, it depends on the target market and popular recognition of the franchise. The more recognized it is then the better chances for your venture to be perceived as an "expansion" of an established business rather than starting as the small underdog.

                Having a solid and recognized brand in the market from day one makes a big difference. When a recognized brand opens a new branch the market is already familiar with it, potential customers know the products and / or services already as well as their prices. No unpleasant surprises here.

                Franchising is not better than owning an independent business by itself. An independent business can even prove to be more profitable in the long term (with the ability of being more dynamic, in the early stages); however, because royalties translate into advice, training and ongoing support the learning curve to required achieve is greatly reduced too.

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                • #23
                  Re: Franchising vs Starting on Your Own

                  I would just like to add a franchise story from a local business owner here in my area. Well, this person bought a beauty salon franchise and it turned out to be successful because she had no competition in the area. After the franchise contract expired though, she did not renew her contract with the franchising company anymore and instead opened her own beauty salon brand using the techniques and knowledge she has learned from the franchise she previously bought. So far, her customers are still continuously increasing until now. So she took advantage of her chance to learn the fundamentals in running a beauty salon through the franchise.

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                  • #24
                    Re: Franchising vs Starting on Your Own

                    Originally posted by gracer View Post
                    I would just like to add a franchise story from a local business owner here in my area. Well, this person bought a beauty salon franchise and it turned out to be successful because she had no competition in the area. After the franchise contract expired though, she did not renew her contract with the franchising company anymore and instead opened her own beauty salon brand using the techniques and knowledge she has learned from the franchise she previously bought. So far, her customers are still continuously increasing until now. So she took advantage of her chance to learn the fundamentals in running a beauty salon through the franchise.
                    I think that depending on what your business is, you can use a franchise as a way to learn that trade and then move on to start your own, but these days you can probably earn more as a franchise owner/manager than what you can if you actually owned the business outright. If the franchise is a business that you are interested in and it's always been a dream of yours to have your own company in that same sector then fair enough, but a lot of the time by the time the franchise is ready for renewing, you'll have made and be continuing to make quite a good wage and that will be hard to give up and effectively you'll be having to start all over again from scratch.

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                    • #25
                      Re: Franchising vs Starting on Your Own

                      What I also like about the idea of owning a franchise is the fact that franchise brands have already done the tedious work of developing its name and gaining the trust of customers which is of course a long way to go when you're starting on your own. It also requires minimal supervision as compared to starting on your own where it really requires almost all of your time especially when you're just beginning. Although, the idea of having your own brand and making it popular with customers in time is also a grand idea that I'm not closing my doors to.

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                      • #26
                        Re: Franchising vs Starting on Your Own

                        In my opinion, it would likely depend on your edge to manage a business and one's financial budget to sustain the needs for the type of business you have in mind. Personally, franchising is better because you know that the business is there already , more often has establish the loyalty of its customers and will need only a minimal budget compared to starting your own. By the way, since I will go for franchising, I would like to share to you an article that will make us understand about its concept and strategies. You may check on "What is Franchising?" . I'm hoping that we can easily decide between franchising and starting your own.

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                        • #27
                          Re: Franchising vs Starting on Your Own

                          Thanks so much for the link Timebuzzer. These kinds of articles are indeed very helpful in educating people about franchising and helping them decide whether it is for them or not. I've also tried reading about the franchises that I have been interested on and they have also given valuable information about franchising that really helps first time franchise wannabes in their decision making.

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                          • #28
                            Re: Franchising vs Starting on Your Own

                            Most franchise stores here of fast food are earning but not all. There are franchise stores that also go bankrupt although I have to agree that a franchise store especially for food has an edge over an unknown food outlet or eatery. But you have to take into consideration the costs. Franchise fee is not peanuts and they you have to subscribe to some of their supplies not to mention the changes in policy that you have to follow. As they say, that's the price you pay. And if the business is not that good then that franchise outlet would just go bankrupt. One businessman told us that you have to make a market survey of how many clients you can get in that location. And the only way is to count the people passing that way and then get 2% as the potential customer.

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                            • #29
                              Re: Franchising vs Starting on Your Own

                              Originally posted by Corzhens View Post
                              One businessman told us that you have to make a market survey of how many clients you can get in that location. And the only way is to count the people passing that way and then get 2% as the potential customer.
                              Wow! I didn't know that. I have actually been wondering how one can determine the potential for customers in a given location. I have aleays thought that if it is a crowded area and it is on road level, then it is a good area for putting up your business. I didn't know there could be a specific formula to that. That businessman quoted a simple formula but one that I think really makes a lot of sense. I'm taking note of this for my future use.

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                              • #30
                                Re: Franchising vs Starting on Your Own

                                Location is often one of the deciding factors when a franchise looks at a proposal. there's no point in asking for a franchise to open a McDonald's for example if there isn't going to be any passing trade or if there's already a lot of competition in that area. that's why I think anytime you see a McDonald's, you will also see a KFC and a subway in close proximity and that way people can then choose what foods they want, and they are all slightly different. There isn't going to be a lot of competition between the three as they tend to serve different foods to each other and you'll find that the owner of one franchise is more than likely also the owner of the others as well. That way they will have a monopoly on that sector, but without actually breaking any specific rules.

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