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Thread: Franchising vs Starting on Your Own

  1. #1
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    Default 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?

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    Default 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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    Default 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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    Default 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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    Default 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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    Default 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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    Default 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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    Default 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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    Default 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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    Default Re: Franchising vs Starting on Your Own

    Quote 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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