FRANCHISING VS. SMALL BUSINESS STARTUP: WHAT'S RIGHT FOR YOU?

INTRODUCTION

Being an entrepreneur is always a dream. And every entrepreneur wants to be his own boss, albeit every person desires for the same but the ones who dreams for it and wants to live their dream, do become one. To choose whether to go for franchising or small business startup, one must compare them and evaluate the merits and demerits of the same as per one’s desires. Before we go into the depth of the comparison. Let us first understand the meaning of the terms.

“Franchising involves two parties namely, franchisor and franchisee. Franchisor is the one who has created a brand and a business model to market the goods and services associated with that brand. And franchisee is the one who often pays an upfront fee plus recurring royalties in exchange for the right to utilise the franchisor's brand name and business model for a predetermined length of time.

Whereas, a startup is exactly what it sounds like—a freshly founded business that has just begun its operations, whether it was created by a single entrepreneur, a group of entrepreneurs, or investors. The owners of the business create and implement the concept, brand, and its operating system.”

MERITS OF FRANCHISING

Firstly, franchising offers the chance to invest in an established, profitable business model that comes with a successful training programme, a reliable supply chain, and skilled technical assistance. The success rates of some of the most well-known franchises are astounding, and the failure rates are typically in the low-single digits.

Secondly, it gives branch recognition as building a brand and a customer base from scratch can be challenging. Franchisees do, however, have a slight edge because trust in the market will already be established and it will be simpler to draw consumers once the business is open.

Thirdly, a franchise certainly comes with established vendor ties. Additionally, with a franchised network, these connections are generally made to provide volume discounts for ones predetermined limits.

Fourthly, when compared to startups, franchisees often have a greater success rate.

DEMERITS OF FRANCHISING

• It may be a pricey investment. “Additionally, franchises have continuous costs that lower the takeaway profits for the entrepreneurs as the franchisor charges recurring costs, such as royalty fees or renewal fees, 
• Buying a franchise is similar to buying a success plan, but success plans only work if they are followed as not all the franchisees wors for all the entrepreneurs which must be taken into consideration,”
• The ones with the object to be their own boss won’t get the satisfaction since in case of a franchise, the owner of such a franchise actually controls your dealings.

MERITS OF SMALL BUSINESS STARTUP

You could be able to convert a concept into a business if you have one. “The best examples are Sam Walton, John Schnatter, Bill Gates, and countless other entrepreneurs who have followed in their footsteps.

Thus, firstly, knowing that you are in charge of and accountable for every part of your business's growth, from conception until success, can be enormously appealing to an entrepreneur.”

Secondly, being your own boss allows you to make all decisions, create your own schedule, and operate the business precisely how you see fit and most importantly you own the startup, therefore no one can tell you what to do.

Thirdly, small business startups give higher takeaway profits to the entrepreneurs as there is no one to charge any recurring costs, such as royalty fees or renewal fees.

DEMERITS OF SMALL BUSINESS STARTUP

• It would be hard to find the consumer-base, and the enough finances to sustain in the market.
• It will demand a long-time hard work and expert- training which is a challenging task for most of the entrepreneurs.
• Additionally, there is immense competition out there which poses a challenge in front of new entrepreneurs.

CONCLUSION

Both the options are appealing since every concept comes with pros and cons. Hence, at the end, it is the choice of the entrepreneur that matters. But before choosing any option, one must go by the nature of business they want, and must also evaluate the merits and demerits. The one who wants to go with less risk of failure shall opt for franchising whereas the ones who want to be their own boss should opt for a small business startup.