Franchising Versus Starting Your Own Business

When you want to start your own business, you will have two choices; either purchase a franchise or start a business of your own.

Each choice has its own advantages and disadvantages over the other. Make sure that you choose the business that is right for you.

One of the things that you should put into consideration regardless whether you will purchase a franchise or will start a business of your own is the profitability of your business in mind. You should determine whether you will be able to acquire a substantial amount of the return of investment within a specific period of time. This is to make sure that you will reach your goal in starting a business; to gain profit.

Investment and Capital

One of the similarities of purchasing a franchise and starting a business of your own is that you will still need to put an investment. In franchising, you will have to pay what we know as franchising fee, this will serve as your initial investment. Take note that in franchising, you may be required to have a certain amount of net worth for you to be able to qualify as a franchisee of a certain franchise company. Also, there may be other fees such as royalty fee and advertising fee. Royalty fee is the amount or percentage of your total profit given to the franchise company itself. Advertising fee covers the expenses of the franchise company whenever it advertises the business.

In starting your own business, you do not need to meet a certain amount of net worth just to start your own business but make sure that your current resources will be sufficient in putting up a business of your own. One advantage of starting a business of your own is that there are no royalty fees. All the profit that you will have will all be yours. There is also no advertising fee because you will be the one who will advertise and promote your own business.

Business Model

An advantage of purchasing a franchise is that you do not need to devise a business plan of your own because this will already be provided to you by your franchise company. The franchise company’s business model is proven effective so you do not need to worry about on how you will manage your own franchise.

On the other hand, in putting up a business of your own, creating a business model or business plan is required. This is because nobody will give you a business model, you have to conceptualize your own plans and the bad thing about this is it is subjected to trial and error. There is no guarantee that the business plan you have in mind will succeed or not because it is still not proven to work in the market.


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