Start a Business or Buy a Franchise: Which Is Right for You?

Business ownership can be a life-changing decision, but the route you take to do so is just as influential. Investing in a franchise and starting a business from scratch are both viable options, but the success and fulfillment you find with either will depend heavily on your own goals and ideals. Both offer unique advantages and challenges, which is why it’s important to understand both models fully before making your choice.

What Does It Mean To Buy a Franchise?

As a franchise owner, you’ll still be starting your own business. The most notable difference is that, rather than starting with a blank slate, you’re investing in a proven system and will have access to a support system that’s in place to help you succeed. 

Buying a franchise is a good choice if you are teachable, collaborative, willing to follow a system and interested in getting a strong start to their entrepreneurial journey.

Here are some of the most important things to consider about the franchise model:

• Most franchises come with immediate brand recognition, which reduces the amount of time and effort you’ll need to spend attracting customers.
• The franchisor provides you with a proven business model that minimizes your risk as an entrepreneur.
• As a franchisee, you’ll receive comprehensive training and support from your franchisor in marketing, site selection, operations and more.
• By joining a larger franchise system, you’ll benefit from collective buying power.
• The franchise model requires both an initial investment and ongoing royalty payments.
• Franchisors sell territories, but these areas may or may not be exclusive.

Depending on your personality and goals, these factors may be assets or liabilities. Some entrepreneurs enjoy following a proven model, but others find it difficult to remain within the boundaries set by the franchisor. Similarly, ongoing royalty fees are an annoyance to some, while others feel they’re getting more than their money’s worth from the ongoing support they receive. It is important to weigh the costs (literally and figuratively) and benefits of the franchise model before investing.

What Does It Mean To Start an Independent Business?

When you start an independent business, everything is up to you! Whether you find this exciting or intimidating hinges on your personal goals and disposition. 

Consider the following:

• You have the creative freedom and flexibility to steer your business in any direction you choose.
• You’re responsible for creating your own brand recognition.
• If you need help with training or operational support, you can build your own team.
• Many people consider independent business ownership to be more risky.

Again, these statements can be interpreted as positive or negative things depending on your preferences. The freedom and flexibility to make any decisions you see fit for your business can be exciting, but it can also become overwhelming in busy seasons. Or, building brand recognition can be hard work, but once it’s complete, you can control your own image — a franchisor’s missteps will not reflect poorly on your business.

Court Aiken, brand leader of Paramedics Brands, shared how these perks and challenges tend to manifest in his experience. Plumbing Paramedics and Heating and Air Paramedics have worked with independent business owners who later chose to convert to the franchise model, and Aiken hears a similar pain point each time.

“The vast majority of business owners who have been in our trade for a while come to the realization, at some point, that they’ve capped out. Whether it’s the scalability of their business or the limitation of their own knowledge of business, they’ve hit that point,” he explained. “They have that epiphany where they say, ‘I need help.’ Most independent business owners will look around at consulting groups, but those companies don’t really build solid relationships with the business owners. That’s where franchising is different.”

Aiken went on to explain that, depending on the level of support business owners want, they could be looking at tens of thousands of dollars each month to be paid to the consulting group; while this cost does bring expertise into the equation, it’s more of a business transaction than a partnership.

Franchising relies on smaller and more consistent royalties to support the resources offered by the franchisor. As a result, franchisees are able to build a partnership with the people in their system and, ultimately, create a long-lasting relationship and a strong business.

“I’m never going to tell someone who wants to go into business on their own that they’re wrong. I offer myself as a resource and wish them well,” said Aiken. “There are those people and entrepreneurs that don’t want to be told what to do. But what I’ve found over the last 22 years is that they do try it, they realize there is a roadblock, and they come back and say, ‘I can now justify becoming a franchisee and paying that royalty to you every month because of all of the benefits.’”

As you start your entrepreneurial journey, weigh the pros and cons of both approaches within the context of what you want and need. There is no one right answer, so choose the model that will give you the support/creative license, connection/independence, and reputation/open potential that best fits your goals.

Related articles:

• Are Franchises Considered “Small Businesses”?
• What Is a Franchise? A Comprehensive Overview of the Business Model
• How to Start the Process of Buying a Franchise: A Comprehensive Guide
• Consider These Factors When Deciding Which Franchise to Invest In