There are a lot of similarities between running a franchise business and running any other kind of business. For instance, they both require that you put in time and energy to get them off the ground and manage them successfully. However, if you are looking to own a franchise, it is important to know some key differences between the two types of business.
If you have operated a regular business before, you will realize that franchises have their own unique aspects.
1. You Have to Follow the Rules
As a personal business owner, you are free to do anything that you like. You can introduce new products. Increase your prices. Change your staff uniforms at any time. But when you own a franchise, you need to follow a set of guidelines and rules. Franchisors set these rules mainly to ensure a consistent experience for their customers at any of the franchise outlets they visit.
The fact the majority of the decisions that have already been made for franchisees is what draws many owners into franchising. After all, the franchise company you are partnering with has spent a lot of money on research and knows what works and what does not. You just have to follow the laid-down guidelines, and you are very likely to succeed in the business.
2. Most of Your Costs Are Upfront
The initial costs of starting a franchise business can range from $500,000 to $100,0000 (of course, there are many less expensive options based on the industry you are venturing into). Basically, when you purchase a franchise, you are buying a turnkey solution that offers you all the things you need to operate, including equipment, uniforms, and marketing materials. That’s why your expenses down the road are significantly lower. However, with a small independent business, your costs will probably be lower in the beginning, but they continue to drain your bank account as time goes on.
Besides, as a franchise owner, your costs are limited. You will be aware of the costs once you speak with the franchisor, and apart from the varying royalty fee you pay every month, you know for certain how much your fixed costs are. When you own a small personal business, you can never be sure of what your expenses will be over time.
3. You Enjoy the Benefit of Having Corporate Support
As a small business owner, nothing having anyone to advise you on what to do or provide assistance when you are in a fix can be frustrating. But as a franchise owner, you will enjoy the benefit of the resources that your franchisor offers and also have a group of other franchisees you can turn to for advice and insights.
However, the corporate support you’ll get goes beyond knowledge and advice alone. You may also have access to software, health insurance, and discounts you will never have qualified for if you own a personal business.
4. The Franchisor Does the Hard Work
Owners of independent businesses continuously strive to make their brands known. But who does not know McDonald’s or Subway? This is because the franchise companies have already invested millions of dollars into branding the business for you (and other franchise owners). They run different marketing campaigns, pay for billboards, and do promotions or other types of advertising, and you reap the benefits. As you can see, running a franchise is quite different from running a stand-alone business. For a lot of franchisees, it’s the opportunity to own a well-recognized brand that drives them into franchising.
