Every day people invest in franchises and make decisions to buy franchised businesses. Even more people make the decision to start their own business every day of every week. It’s a never-ending cycle of optimistic, creative and visionary people making the decision to set out on their own and take control of their own future. So why is that people choose to invest in a franchise vs. starting their own business? The two categories are actually very different from one another, even though both are in effective entrepreneurs.
1. Franchisees are entrepreneurs with a safety net. They like and appreciate the security of not having to figure things out on their own and be able to benefit from a blueprint for success in the business they have started. Franchising generally has a higher success rate and offers franchisees better odds of making it in their new business model. In return, franchisees pay a franchise fee and a royalty on the revenues they generate from the franchised business.
2. Entrepreneur business owners have a strong ability to accept and embrace risk. A true entrepreneur makes quick decisions, always sees the upside and has a strong vision for what they aim to accomplish. Entrepreneurs break rules and set their own standards for life and business, where typically franchising would be difficult for them to accept the structure and rules inherent in a franchise system.
3. Franchisees enjoy and thrive in a rule-driven environment and like the idea of being providing a road map. Franchisees generally make good employees, they are strong performers in a process-driven environment and are ok following someone else’s lead. Many times franchisees are not ideal marketers and sales people, they buy a franchise in order to be provided with a franchise marketing system that offers lead generation, branding and a proven business development model.
4. Entrepreneurs generally make great sales people and don’t think twice about whether they can sell what they do. There is no concern for “if”, just maybe how much they will sell of what they do. And in most cases, sales ability is paramount in any new business start up as to whether the business has the ability to survive the start up phase.
5. Professional franchise investors look for scale. They like to see that a model allows for absentee ownership and for a single franchise owner to own 2, 3, 50 units of a franchise system. Good systems and structures from a franchise model can allow for this and in extreme cases, franchises have built up hundreds or thousands of units within a franchise network.
6. Entrepreneurs have big egos and like to see their names in bright lights. Many times ego is what makes an entrepreneur successful, their excitement about leaving a legacy and putting their name on the map is what drives the success in the new business. Franchising doesn’t allow for this and as a franchisee you need to fall under the brand and the overall system requirements.
Evaluating a franchise or new business start up takes time and effort, it is critical to make sure that you know your own skill sets and personality as to which model is right for you. For more information on buying a franchise or starting your own business, contact us: