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Franchising vs Starting on Your Own

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  • Franchising vs Starting on Your Own

    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?

  • #2
    Re: Franchising vs Starting on Your Own

    Well I think that it really depends on what kind of business you are looking at. If you are franchising a restaurant like business, you will likely have little input as to prices and products and decisions like that, because those are already set out and standardized across franchises. You do get to experience the managerial side though and choose employees and make the store your own, so in that sense it is great for a first time business man. It gives you the ability to master that one side, and not have to worry about the other stuff.

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    • #3
      Re: Franchising vs Starting on Your Own

      Like you say in the original post, franchising is the best option if you're entering in to a business that you don't have any previous experience in, but from my pint of vie, you shouldn't really be thinking of opening a business you know nothing about in the first place and franchise or self owned or not, your destined to fail from the outset.

      The start up cost of a franchise can be considerable, but a lot of people will often choose that option as they look at it as an opportunity to run their own business but at the same time have some sort of safety net just in case they get into trouble. They know that the franchise or chain will bail them out if needed, but if you're starting a business with that attitude, then I'm not sure that owning any sort of business, franchise or not is for you. If you're not passionate about that sector and are just hoping to make money from it, then your business won't be started with the right attitude from the outset, and these days even franchises will want some level of experience or knowledge before they look at an application.

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      • #4
        Re: Franchising vs Starting on Your Own

        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.

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        • #5
          Re: Franchising vs Starting on Your Own

          I think franchising is definitely the safer option when you can afford it, but it is different from starting your own business in more ways than one. From what I understand franchising is most like an investment wherein you can expect certain timelines and a certain amount to return and it can be a bit more predictable but at the same time the stability can also be its own limitation whereas if you start your own business you are free to do with it what you want and because of it your profits can have a lot more potential but the downside is that it's a little more risky and you don't have as much support.

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          • #6
            Re: Franchising vs Starting on Your Own

            I am not sure if franchising is actually better than starting a start-up business on your own. However, people with limited capital but do not have enough time to be hands-on (particularly if they're still maintaining a day job) can benefit from putting up a franchise. Franchising has a higher ROI and a little less risky than starting a business on your own. There's already a built-in support system when you franchise because the company will supply you with everything from personnel training to the products. They also conduct market research on your behalf so that you get to set up shop in a location where you're sure to make great profit.

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            • #7
              Re: Franchising vs Starting on Your Own

              It really depends on the type of business that you want to enter. Starting from scratch has its own advantages and disadvantages. The same can be said about the option of purchasing a franchise. There are a lot of things that you need to consider. What's good about franchising is that the brand is well-established so all you really need is a good location and there's very little chance that you are going to fail. The problem with franchising is that you don't have full control over the business and your option for expansion is very limited. If you start a business from scratch, building it will take a lot of work. However, you have full control and there's very little barriers if you ever decide on expanding the business.

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              • #8
                Re: Franchising vs Starting on Your Own

                Thanks for the responses guys! Both franchise and start-up have their positive and negative traits so I guess it's really up to the would-be business owner to figure out which option would really work for him/her. Same as with any other aspect of life, just like what pwarbi said, I think the passion to start and keep on running a business is a major key in succeeding at it.

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                • #9
                  Re: Franchising vs Starting on Your Own

                  When talking about a franchise, I think the biggest one that will spring to mind will be fast food outlets such as McDonald's and KFC, as all of their restaurants are franchises rather than owned centrally. While applying and getting accepted for a McDonald's franchise depending on your location can be almost a licence to print money and write your own wage slip, the initial startup cost is bordering on the ridiculous.

                  Considering you can probably start up your own fast food place for around 250,000 over here in the UK and that's at the very most and is also including your rent of a building for a year, with a McDonald's franchise your looking at having to put around a million pound upfront before they'll even consider your proposal. While for that cost you do get their experience and pretty much any help that you could possibly require, at the same time its a lot of money to have to find all at once upfront, and will no doubt put a lot of people off.

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                  • #10
                    Re: Franchising vs Starting on Your Own

                    Originally posted by pwarbi View Post
                    When talking about a franchise, I think the biggest one that will spring to mind will be fast food outlets such as McDonald's and KFC, as all of their restaurants are franchises rather than owned centrally. While applying and getting accepted for a McDonald's franchise depending on your location can be almost a licence to print money and write your own wage slip, the initial startup cost is bordering on the ridiculous.

                    Considering you can probably start up your own fast food place for around 250,000 over here in the UK and that's at the very most and is also including your rent of a building for a year, with a McDonald's franchise your looking at having to put around a million pound upfront before they'll even consider your proposal. While for that cost you do get their experience and pretty much any help that you could possibly require, at the same time its a lot of money to have to find all at once upfront, and will no doubt put a lot of people off.
                    I agree with you. McDonald's has an incredibly high amount of money required for a person to be able to franchise it. One has to be very wealthy to be able to get a McDonald's franchise where I live. This is why most of its franchise outlets here are owned by companies or corporations. There are some individual franchisees but they're mostly well-experienced entrepreneurs. No average Joe could ever acquire a McDonald's franchise here.

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                    • #11
                      Re: Franchising vs Starting on Your Own

                      This is something that has been discussed within my circle of friends as we were interested in franchising a fast food restaurant in our local area. It really depends on the franchise you're looking into acquiring. A big successful chain would almost certainly bring in a lot of money off of the sheer number of visitors everyday. Not a day goes by where I haven't seen people flooding the front doors to buy fast food. If you have the resources to buy into something big and successful, then I would go for it. Even at a small restaurant, I would go for it.

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                      • #12
                        Re: Franchising vs Starting on Your Own

                        If you have zero business experience I would certainly recommend looking into franchising. The problem with it though is the high startup costs and low amount of control. If you have some business experience I would suggest branching off on your own but be aware that it will certainly be tougher to gain the initial traction you need to be successful.

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                        • #13
                          Re: Franchising vs Starting on Your Own

                          This is my experience as part of the market in the food industry. We seldom dine in unknown restaurants unless it is recommended. When we travel, we make it a point to eat in franchise restaurants and fast food only. There were so many times that we were disappointed when dining in unknown restaurants because the taste of the food has no guarantee. So if I would be on the opposite position (as the entrepreneur) I would probably take the plunge with a franchise. The idea is that the franchise already has a captured market that in effect your new business would not really be a newbie when it comes to market. However, a franchise business is not a sure way to success because there are so many cases of franchise outlets that closed shop - one is the small bread store near the gate of village that didn't last for a year in spite of being a franchise outlet.

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                          • #14
                            Re: Franchising vs Starting on Your Own

                            I think a franchise would be kind of a cookie cutter deal, with built in robotics. I may never make a fortune at my little endeavor, but it is mine and it is interesting to me. And figuring it out is part of the fun. If your only concern is making money, then a franchise might be good. But it might be boring, as it would not be your own creation. I place a high value on freedom and I'm willing to struggle more to have it.

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                            • #15
                              Re: Franchising vs Starting on Your Own

                              Another thing I'm considering as an advantage of franchising is it's ability to provide an opportunity for learning when it comes to a new entrepreneur who is still starting to venture into doing business. Things such as inventory, auditing, and overall management of the business are already provided in a franchise so it allows time for the new business owner to learn before finally venturing out on his/her own someday. There's this famous beauty salon franchise which has been running smoothly for years in our town and by the time the franchise contract has expired between the franchiser and franchisee, the latter no longer renewed the contract and started up a beauty salon of hr own applying everything she learned from her previous franchise business.

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