Franchise vs. Independent Business: Which is Right for You?

Owning a business is the first choice of most outgoing professionals with a flair for marketing and creativity. They are never satisfied with working for others and want to build their legacy through a trusted brand. They are brimming with ideas and patiently wait for the day when they can realise their entrepreneurial dreams. The most common pathways for accomplishing this goal include starting a business from scratch or buying an existing business or franchise for sale. While setting up a new venture requires a lot of groundwork, acquiring a franchise is much easier.

Budding entrepreneurs can choose any course, depending on their needs and desires. Many strong-minded individuals with a vision are confident about starting a business from the ground up. They want to be in complete control of every aspect of their organisation. Let us help end this debate by offering a comparison between franchises and independent businesses. The differentiating factors can help aspiring entrepreneurs make the right choice.

1. Understanding the Franchise Business Model

Franchise business offers the franchisee the right to use the brand name and trademarks of the franchisor’s business in exchange for the initial franchise fee and ongoing royalties. Entrepreneurs use franchising to expand their business without increasing their workload. They put up a business for sale Brisbane to be operated as a new unit with the same branding, marketing materials and working procedures. They maintain consistency throughout the units and keep adding new outlets to build a large network. Many franchises expand into international markets to increase revenue and keep growing. Some examples of home-grown franchises include Poolwerx and Soul Origin. Various international franchises are also highly popular among the customers.

2. Benefits of Owning A Franchise Business

Individuals who buy a new or existing franchise for sale can enjoy the following benefits:

Low-Risk Business Model

Franchises are built on a proven business model with a successful track record. The risk of failure is much lower because the products and services have been accepted by the target audience.

Leverage Brand Awareness

Franchise businesses achieve quick success because customers are already aware of the brand and have used the products. They perceive it as a credible entity with trusted and viable products. This helps drive traffic and increase sales and conversions.

Training and Ongoing Support

Franchisors train the franchisees in standardised operating procedures and operations. They also provide an operations manual and ongoing support to help franchisees deal with challenges without hassle.

Easier to Secure Funding

Potential Franchisees can easily get funding for buying a franchise in Brisbane because the business is stable. Banks and moneylenders review the franchisor's financial records and are assured of the new unit's success.

Marketing Support

Franchisees do not have to worry about brand building and advertising because the franchisor takes charge of everything. They provide marketing collaterals and in-store branding materials to help the business grow.

3. Disadvantages of a Franchise Business

Franchise businesses have some disadvantages as well. These include:

Lack of Autonomy

Many individuals prefer buying a business for sale in Brisbane rather than owning a franchise because the former offers less autonomy. They may feel restricted when they have to follow the franchisor's instructions and may not be able to use their ideas.

Shared Profits

A franchisee has to share a percentage of his profits with the franchisor as the marketing fee and royalties. They may also have to pay training fees if it is an ongoing process and every time they hire employees.

Fixed Franchise Term

A franchise is not owned by the franchisee forever. They can only run it for a specific period. They can get the agreement renewed by the franchisor, but the franchisor must be willing to do the same. They may agree to renew but increase royalties and ask for a renewal fee.

4. Understanding an Independent Business

An independent business can be started from the ground up or purchased. It offers complete ownership of the entity forever with full control over its finances. The owner is responsible for the income and expenses, including the ownership of assets and liabilities. The business can have stakeholders if the owner decides to get funding from investors in exchange for equity.

5. Benefits of an Independent Business

Individuals who purchase businesses for sale in Brisbane or launch a start-up can enjoy the following benefits:

Flexibility and Independence

Entrepreneurs have complete freedom to make new policies, improve old procedures, develop new products or enter new markets. They do not have to seek permission and are not answerable to anyone for their actions.

Financial Freedom

Business owners keep the profits and decide how to use them without sharing them with anyone. They are their own bosses and responsible for their revenue and debts.

Satisfaction and Motivation

Entrepreneurs who run a business in their field of passion become mentally strong and stay motivated to perform. They are enthusiastic and willing to go the extra mile to meet their goals.

6. Disadvantages of an Independent Business

Here are the downsides of owning a business:

High Financial Risk

A large number of small businesses fail every year due to various reasons, such as financial mismanagement, lack of operational efficiency and ineffective marketing. Thus, starting a business is a big risk that can lead to significant losses.

Overwhelming Responsibilities

Entrepreneurs manage everything from marketing, administration, finances, and sales to operations and distribution. The pressure of their workload can cause them to become stressed, which disturbs their work-life balance and affects their relationships.

Lack of Funding

Sufficient funding for establishment and development of a business is always a challenge for new entrepreneurs. They may not be able to gather the required funds from banks based on their ideas and business plan.

7. Franchise vs. Independent Business: Which is Better?

Owning a franchise may appear more beneficial to individuals who lack confidence and need the support of an expert. Conversely, individuals who wish to work without interference should focus on buying a Brisbane business for sale or starting a new venture. Independent businesses are riskier than franchises, but if the individual purchases an existing entity, they can access the established resources and cash reserves. Ultimately, the choice depends on the temperament of the person looking for an entrepreneurial opportunity.

Wrapping Up

Choosing between a franchise and an independent business is a tough decision. Aspiring entrepreneurs must understand the business models and pros and cons of each type to make an informed decision. It can prevent them from repenting later.