After you’ve been working for a few years a certain thought begins to linger in the back of your mind, ‘do I have what it takes to do this on my own?’ It’s a big decision and one that shouldn’t be made without extensive consideration. Once you’ve come to a decision questions begin flooding your mind and suddenly you find yourself with endless possibilities and paths, which can sometimes become intimidating. One question you may resort to is ‘do I want to be an independent business or a franchisee?’ Like everything, each have their pros and cons, it all depends on the individual.
The foundation of becoming an entrepreneur rests on one vital factor; do you have the ability to recognise opportunity? Yes? Good, then it’s time to start asking questions and begin your research starting with ‘what does it mean to be an independent business or a franchisee?’ An independent business is somewhat self-explanatory; you have complete freedom and responsibility over every aspect of your business, it is franchising that may be a little vague. A simple definition of a franchisee is:
‘One that has been granted the right by a corporation to sell its product or service within a particular McDonald’s is one of the most well-known franchises in the world. The chances of success are significantly higher when investing in a McDonald’s franchise rather than opening your own burger shop, however you’ll need to follow specified guidelines and policies outlined by the franchisor.
Entrepreneur Magazine published ‘the 10 reasons to buy a Franchise’ on their website with the major benefits including:
- An established record of success; effective processes and procedures are already operating.
- Strong branding and marketing; a recognised brand with developed and ongoing marketing.
- Purchasing power; contracts with key suppliers that include discounted pricing.
- Risk avoidance; there is a lower risk associated with franchising than starting an independent business.
- Ongoing support; the franchise will provide support and training from the initial start-up and throughout the life of the business.
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These factors contribute to the success rate of franchises with the International Franchise Association reporting ‘96.9% of franchised units opened nationwide (United States) within the past 5 years are still in operation.’ Franchisee success can be affected by the age and industry of the franchise, there is no guarantee that franchising will ensure survival; it can however increase the possibility.
Research and development (R&D) is a crucial phase of business, and one significant benefit in franchising. According to the Department of Industry, Innovation, Science, Research and Tertiary Education small businesses spent approximately $2.3 billion on R&D in 2010-2011. As an independent start-up company this is what you’re up against however as a franchisee, this is an initiative the franchise are likely to already invest in.
The ultimate benefits are:
- You can start a family business without having to move away from your hometown.
- Have the freedom to operate your business.
- Do the work you love while the nitty gritty gets covered by the franchise.
- An established brand attracts more customers in the early days of the business.
It’s not to say that a franchise is for everyone, there are some who may prefer to do it alone as it can cost less to start up initially and you would have complete autonomy over all aspects of the business.
What’s most important is that you make a decision that suits you whether it’s becoming an independent business, or deciding which franchise is right for you, if you have the drive you will be successful regardless of the path you choose.
If you’re a builder who is considering starting a business and you’d like to know more about our franchise, contact franchise.hotondo.com.au.