If you have decided to get out of the rat race and become a business owner – congratulations! Chances are that you have owned a business before, or maybe this is your first time trying to strike out on your own. But whatever the case may be, you probably have one important question on your mind as you begin to search for your next business: What are the main differences between buying a business and buying a franchise? Find the answer to this big question below.
Strong Support Network
When you are purchasing a well-established business, you will have a network of supportive people around you who are ready to help. You will also have the full support of your family in your new venture. You may be a part of a group of experienced people that support you as you set new goals and a new direction. You might also have a transition team supporting you while you are taking over control of the business.
You will get all this and more when you purchase a franchise
The support network you will have with a franchise is very strong. Apart from those we have mentioned above, you are also going to have the support and encouragement of the franchisees who have succeeded in the same business. What differentiates these types of owners from those you would purchase a business from is that they still have a vested interest in the success of the franchise. Once you have bought and launched a franchise, you will be able to benefit from their intellect and use it to strategize and expand your business.
Ongoing Partnership
For the entire duration of your franchise ownership, you are going to work hand-in-hand with the headquarters office of the franchise you are pursuing. This means that you won’t be left alone to determine how to do a task or develop new marketing material for your franchise on your own. After you have purchased the franchise, you will still continue to receive assistance, guidance, and directions from those who are experts in the business.
This continual partnership is one of the key differences between buying a business and buying a franchise.
Having a corporate office to guide you will also help keep your franchise fresh. The folks at the office are always coming up with new ideas and systems for your market, allowing you to be creative in your offerings to customers. It will also give you the chance to grow your business smartly in the following years, eliminating the guesswork of marketing your franchise.
Disclosure Documents
Whether you are buying a franchise or startup, it’s important that you understand what’s going on in the business, what has occurred in the past, and what the future holds for the company.
Franchisors are required by the US Federal Trade Commission (FTC) to offer this information in the franchise disclosure document (FDD) given to prospective owners. This includes the expected fees, financial performance, litigation history, and other important information.
The Federal Trade Commission has also made a regulation mandating other business sellers to abide by the Business Opportunity Rule. This rule requires that sellers provide the buyer a disclosure document to evaluate the investment before they sign.
While the Business Opportunity Rule is a welcome development, it is still not as in-depth as the FDD. Unlike Business Opportunity Rule documents that may not be more than a page, FDDs are usually more than 100 pages.
Which one is right for you?
A franchise is the less risky of the two options. While you will be one to grow your franchise and creatively market your new business, you can be sure of having a strong support network behind you as you venture into the world of business ownership. This kind of security is what attracts business-minded people into franchising as it is both reliable and empowering.
