Should You Start a Business or a Franchise? 6 Considerations 

Deciding between a business and a franchise is a weighty decision. Each approach has its unique advantages and disadvantages. It’s up to you to weigh the pros and cons, arriving at the best option for your unique vision and place in the market. 

There’s no one-size-fits-all answer — every situation is different, and there are many factors to consider. Here are six considerations to help you decide whether to start a franchise or a business. 

Benefits of Starting a Franchise 

Deciding between starting a business and a franchise depends heavily on your comfort level with taking risks. In general, opening a franchise is the safer bet for the following reasons. 

1. Proven Business Model

Perhaps the biggest advantage to starting a franchise is the proven business model, which minimizes your chances of failure. You’ll work with the franchisor to select the ideal location, negotiate the lease and arrange tenant improvements necessary to launch your enterprise. 

While some franchisors allow individual franchisees to contract with local contractors and subcontractors for build-outs, others take a more intensive approach. Once you agree upon the site, the franchisor handles construction from start to finish, turning over the keys to the establishment upon completion. Your biggest concern could be maintaining your patience as you wait for the sometimes lengthy process to complete. 

2. Superior Support 

The added support doesn’t stop once you locate and build out your new franchise. Many franchisors also provide the following tools to help you succeed: 

• Trademark
• Operation Manuals
• Marketing Plans
• Knowledge-Sharing
• Training 

These tools save you time and money. Registering a trademark can cost $250 to $350, and you may have several — for example, both the Golden Arches and the Big Mac are registered trademarks of Mcdonald’s. Marketing plans often cost tens of thousands of dollars, and training materials can quickly add up and cause recurring expenses as you add more employees. 

3. Decided Marketing Edge 

It’s nearly impossible to put a price tag on brand recognition. For example, let’s say you want to open a sandwich shop. You might have the best grinders in town, but it could take years until you become popular enough to stay in the black. Without solid capital to back you while you gain momentum, you could become one of the four out of five such establishments that fold within the first five years. 

Compare that to opening a Subway, especially in a small-town location lacking such an amenity. The name alone raises customer interest well before you launch, and the promise of a delicious sandwich and cookie has them lining up for your grand opening. 

Benefits of Starting a Business 

While starting a franchise gives you certain advantages, there are also considerable benefits to starting a business. Let’s see how going the independent route may better serve your interests. 

1. Total Freedom 

Starting an independent business works best when you have a unique and original concept that doesn’t fit into an existing franchise model. For example, there aren’t too many restaurants offering wild game unless you’re into curly fries. Therefore, you’re better off going solo if you envision hungry customers wolfing down moose chili in a cozy lodge lined with antlers. Doing so gives you ultimate control over the following: 

• Design Elements: You can include any decor or amenities you like, creating a fun, festive family atmosphere or a specialty establishment catering to wine aficionados. 
• Hiring Practices: Many franchises have suggested salary schedules that don’t allow much wiggle room. What if you’re in a pricey tourist town and such a structure prohibits you from paying sufficient wages to keep staff struggling to afford area housing? Starting an independent business lets you offer any incentives you like to keep the best help. 
• Advertising: Although your profession may require you to adhere to ethical advertising practices, you don’t have to use a clown to sell burgers or someone in a Statue of Liberty costume to broadcast your tax preparation services. 
• Corporate Structure: Are you considering an alternative corporate structure, such as a co-op, to give your workers greater ownership over their labor? Such arrangements offer many of the benefits of franchises by bringing people with related expertise together but lack the hierarchical, top-down organizational model — interested parties decide together on their shared values and details of their concept. 

2. Bring Something New to the Market 

Perhaps the best reason to go independent is to bring something new to the market or differentiate your invention from the competition. For example, the Snuggie is essentially just a robe tied on backward, but launching it as a separate product netted its inventor over $200 million. While such investments may be risky, they can pay off big time. 

3. Fill a Need in Your Community 

Here’s a crazy mindset shift: who said that profit is the only measure of success? Your goal might not include raking in as much profit as possible but filling an urgent need in your community. 

For example, let’s say you open a truck stop. Such locations are valuable resources not only for those behind the wheels of the big rigs but also for the growing number of people living in vehicles, thanks to housing costs. Part of your business model may entail letting customers purchase a shower for someone in need. This move won’t pad your bottom line but could foster considerable goodwill and make your location a bustling hub of activity. 

Getting a franchise to approve such a measure could entail considerable red tape, and corporate could refuse to implement your idea. Independent business owners face no such restrictions or complicated procedures. 

What’s Best for Beginners — a Franchise or Independent Business? 

A franchise is your safest bet if you are new to running a business. It offers a valuable learning opportunity — all you must do, in many cases, is follow directions. Furthermore, you have an entire network to support you if you run into trouble. You might even shadow another franchisee, treating them as a mentor before branching out independently. 

However, starting independently might be the only plausible route if you have limited capital. On average, most franchisees pay $20,000 to $50,000 to acquire their business. If you can’t find investors willing to cough up that much cash, you might launch your idea as a side hustle while maintaining your day job. That way, you minimize your risk of financial disaster while letting your enterprise grow organically until you’re ready to take it full-time. 

Starting a Franchise or Business 

One of the biggest decisions new business owners face is whether to start a franchise or business. Your chosen model has much to do with your ultimate success. 

Use this guide to decide if a franchise or business is right for you. Your future is as bright as you make it.