5 Advantages of Buying a Franchise vs Starting Your Own Business

Share this:

More than 500,000 people start a business each year in the UK and 600,000 in the US. Some people are driven to earn more money or be their own boss whilst others strive for increased flexibility and a more favourable work-life balance. For some, a major life event such as losing their job spurs them on to seek a new career path and business venture.

While building a business from the ground up can be very rewarding, it requires meticulous planning, steely determination and an understanding of sound business principles in order to succeed. Unsurprisingly, branching out alone can be intimidating for budding entrepreneurs and the risks are high. This is why some people opt for franchising is an alternative route for owning a business because it offers more security then starting anew.

Successful Start-Up 101 explores the advantages of buying a franchise over starting your own business.

Brand Recognition
Starting a new business requires you to spend time building a reputation and attracting customers which takes time, effort and money. However, one key advantage of franchising is that your business is based on a proven and successful model. You are associated with an already established brand, reputation, customer base and product or service. What’s more, franchisees often have access to national advertising and ongoing support with this too.
Finance
According to The Telegraph, it is estimated that 50 percent of new businesses fail within their first five years. Given the high statistic, it is no surprise then that one of the biggest challenges faced by entrepreneurs is the ability to acquire seed capital to kick-start their business. Even with a water-tight business plan, private investors and financial institutions may have reservations to back a new business venture. However, franchises have a lower loan default rate than other new businesses and therefore lenders may view this as a safer type of venture to provide backing for. It is generally easier to acquire business finance as a franchise.
Training & Support
For first-time entrepreneurs, making the journey alone into business can be a steep learning curve and result in a number of mistakes. Every aspect of the business must be self-taught and often there is no support in place when things go wrong. Essentially with franchises the mistakes have already been made and new owners have resources available to them to ensure they avoid common early pitfalls. Many franchisors provide training and educational materials to support and develop franchisees.
Overheads
In some cases overhead costs are lower for franchise owners than independent businesses. As a franchisee you would have access to the company’s nationwide distribution system when it comes to low-cost bulk purchasing. In addition to this, franchisees can depend on a consistent product supply and if sales are high then access to high volumes of stock can also be expected.
Opportunities
As an entrepreneur your thoughts are consumed by your business 24/7, which makes sense since you are so heavily invested, right? Take your eye off the ball for a moment and everything you have worked so hard to build can all too easily fall apart. It is a full-time job. However, for those not looking for a full-time commitment, there are a number of part-time franchising opportunities that are perfect for someone with a small amount to invest that wish to support themselves and maintain their investment.