The Benefits of Owning a Franchise

There are key differences between running your own independent business and running a franchise. In this article we are going to explain what these differences are and why owning a franchise could be the better option for you.


Benefits of Owning a Franchise


For lots of people, running their own business is a dream that they may never be able to fulfil. Lots of things put people off, such as initial costs; time; job security; and bills which can hinder someone taking the risk. However, if there was a way that you could become your own boss but in a way that was almost guaranteed to work, I am sure this would give people the push they need. This is where franchising comes in.

What is a franchise?

First and foremost a franchise is an extension of a currently operating business, in which you take their entire business model from the uniform, product and logo and trade under their brand in various locations around the UK. A franchise allows a person to take a successful companies idea, use it as their own and reap the rewards from doing so. You will know a lot of everyday franchises such as Amazon, Costa and Papa John’s who are all connected in the franchise network.

It is important to highlight that although franchises are from original successful businesses, it did not happen overnight or without hard work. Running your own business, independent or franchise, you will need to be determined to work extremely hard and conquer a lot of initial hardships to prosper.

Advantages of running a franchise

When looking at owning a franchise, you need to be ruthless in terms of what specific advantages you can get from it. Being subjective allows you to make clearer judgements as to whether it is right or wrong for you, and even with this guide it may not personally suit your situation.

Failure Rate – When looking at the statistics of franchises, the numbers do not lie. Very few franchise units are failing, and you may argue that the ones that do fail are down to the owner themselves. The reason for this is because there is already an established business that you are mimicking and therefore you can see the market need for the product you are selling. Setting up your own business and trying to compete with a competitor who is nationally recognised is a challenge, one that you may not win. Because purchasing a franchise comes with all the necessary materials and guidelines to follow, this helps mitigate the risk factor greatly because you are going to be using a tried and tested method of business operation.

Brand Awareness – As mentioned above, everyone knows the coffee franchise Costa. However, if you were to set up a little independent coffee shop nearby, it is not to say that you would not compete, but it would just be more difficult. You must put yourself in the shoes of the consumer. Do you go to the nationally recognised coffee shop where you know what to expect from the products? Or do you go to a small coffee shop where you could be rewarded for taking the chance and be greeted with equally great coffee, or alternatively regret buying a sub-par refreshment. It is difficult to judge but one to bear in mind when making your decision.

Franchise Family – When becoming a franchisee, you are instantly connected with other likeminded individuals who have also followed their aspirations of owning their own business. They too decided that joining a franchise network was a better option for them as they have instant access to help, guides and assistance from the parent franchisor and the other franchisees. When becoming a franchise unit, you are entitled to marketing material, occasionally leads generated for you from their CRM and suppliers for all your business needs. Because of the relationship the franchisor gained, you can take advantage of this instead of having to make all the contacts yourself.

Profits – Obviously, it goes without saying that what it all boils down to is money. Which way is going to make the most amount of money? Job satisfaction, work/life balance all come into it do not mistake that, however money is what pays the bills. When it comes to franchising, the initial franchise fee can be an indicator as to how easy your Return Of Investment (ROI) can be. The higher the franchise fee (e.g. McDonalds can be up to £1million) usually means that you are likely to recoup that money fairly easily. When starting your own business, the initial investments for an independent business can be much higher than if you were to purchase a low-cost franchise too.

Disadvantages to owning a franchise

Despite looking like it can only be an advantage owning a franchise, there are some disadvantages to take note of when deciding between the two.

Costs – When you run an independent business, all your outgoings will be on things you have control of such as equipment, staff, stock etc. However, when owning a franchise, you will have to pay a ‘franchise fee’ every month which are royalties. This monthly subscription as such will have to be paid regardless of profit margins that month and will continued to be paid throughout your entire career as a franchisee. As well as the franchise fee, some brands charge for advertising or other additional packages that can soon rack up a hefty bill.

Risk – When becoming your own boss, regardless of independent or franchise it is always a risk. The risk arguably when starting on your own can be greater but this does not discount that franchises can be risky. If you are looking to purchase a franchise, perhaps a less-expensive one due to finances, it is imperative to know that just because the original business worked well and profited then you are not guaranteed to do so as well. This is due to being in a different territory, different competitors, different market. It is important you do your research in figuring out whether the franchise you are interested in has a need in your area.

Rules and Guidelines – The premise of owning your own business is that you become your own boss. But when owning a franchise, you still in a way have a boss, being the franchisor. Although some leeway in how you run your franchise operation may be allowed, you will not have complete control in how you operate. These directives must be followed, there is no skipping past them. The measures in place are what made the franchisor able to franchise their business so sticking to these rules are essential if you are to be successful.

When looking to become a business owner it is essential that you do your research. Being unprepared can be an extremely costly mistake, something completely avoidable if the necessary steps are taken. Being your own boss is great and being able to run things how you dreamed of is very sentimental, however not always practical. Buying into a franchise could be the way you make a success of yourself, whilst getting the extra help and guidance you need.