08 Sep, 2017

Franchise Vs Own Business

The issue of ‘franchise Vs own business’ is a very hot topic in the United States. This is so because there are advantages of owning an independent business and at the same time there are also advantages of owning a franchise. Most comments, reviews ands opinions on the franchise Vs own business however seem to favor the franchise. The main reason why very many people argue in favor of the franchise is because of the benefits that come with franchising and the challenges that face starting business from scratch. The laws of setting up of businesses in the United States vary from state to state. In practice, you are required to acquire various licenses and file numerous applications with the relevant government authorities. If you want to set up your own business you simply have to workout everything for yourself and at your own cost. You may have to hire an attorney and this is in most cases costly. You have to comply with the complex and rigid procedures and this may take some time and be really stressing. If you choose to buy a franchise you will benefit from the training that is offered by the franchiser. Some franchisers also help you secure some strategic locations in which there are adequate customers. Another great advantage of franchising is that you will virtually take over the management of a business that is already established. If you set up business from scratch you have to establish your business trade name. You are likely to face a lot of stiff competition from the businesses that are already in existence. The saddest news about setting up own business is that most (over 50%) independent businesses in the US fail within the first five years of establishment. According to the statistics, only 2% of the franchised businesses do fail. Proponents of the sting up of independent businesses in the franchise vs own business ‘contest’ have only one strong point; that you will be entitled to all the profits if you set up your own business. Other adverse comments that are against franchising in the franchise vs own business arise from the fact that some franchises (especially those with high returns of investment) are not that cheap. Some are seriously expensive. The crystal clear fact and argument against franchising is that you lack the independence. You have to manage the business according to the instructions, rules and regulations of the franchiser. In most cases, you have to use the business trade name and logo of the franchisor and you cannot offer any additional service without the written consent of the franchiser. Most people are also not comfortable with the royalty fee that is levied by some franchisers on all the gross sales that you make on the franchise business. This notwithstanding, there are stronger points in support of franchising instead of setting up own business.