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Should I Start My Own Business Or Buy A Franchise?

It’s funny how the human mind works. We can work our way up the career ladder for decades without hesitation, but then one day we may decide it simply isn’t for us anymore.

The 9-5 suddenly seems like a slog, and the best part of the shift is the clock telling us it’s time to head home. That’s no way to work.

If you’re tired of your role and know you have much more to give, you might decide to bid farewell to PAYE life and start up on your own instead.

But how to go about it? Startup vs franchise is the eternal debate, with both approaches having their own pros and cons. It’s a case of weighing these plus points and drawbacks against one another – and that’s exactly what this guide aims to do.

Choose right and who knows, you could end up becoming one of those phenomenal success stories you read about in your local paper…

There are four main areas worth considering during the decision-making process: investment, marketing and branding, support, and the chance of success.

 

Initial setup and investment

 

 

On the surface, setting up a brand new business appears to be a lot tougher and more expensive than simply opening another branch of an existing company.

In reality, buying a franchise can often work out just as expensive as starting your own venture – sometimes even more so.

Why? Because well-established franchises come with entry fees. If you want to hop on the bandwagon and reap the rewards, you essentially need to buy your way in.

This shows you’re committed to the cause, financially invested, and genuinely passionate about pursuing a career as a franchisee.

You’ll also need to continue paying fees to the franchiser you’re representing. If you’re successful, though, it’s a small price to pay.

Advertising costs are mostly covered centrally by the franchisor, and you’ll be assigned your very own marketing budget, meaning you won’t have to dig deep into your own pocket to push your brand image (more on this later).

With startups, everything is funded from your own bank account – which is why it’s important for budding entrepreneurs to save up a substantial business fund before they set up.

There are government schemes and grants available for businesses in specific fields, but you’ll need to put a strategic plan in front of the funding bodies in order to receive this money.

You’ll face similar challenges when attempting to attract investors. It can be tough to get others to believe in your idea as much as you do, and whilst this can make things financially tougher, it doesn’t necessarily mean it’s a bad venture.

There are countless tales of wealthy entrepreneurs who couldn’t convince anyone to support them during the early stages. If the gap in the market is there, and you feel creative enough to take advantage of it, there’s every reason to take the plunge.

 

Marketing and brand recognition

 

Marketing and branding is arguably where franchising has the edge on startups, providing you’re comfortable working within the confines of the established brand.

Signing up to a franchise means most of the branding work is already done for you. You’re peddling a proven product that sells well, and you’re representing a name that’s tried, tested and trusted. Everything’s in place and good to go.

In some instances, you’ll have the option to advertise your own branch with a pre-assigned budget, and some franchisees get involved in marketing on quite an active level. Ultimately though, it’s up to the franchiser how much creative expression you have. If your branch is struggling, they’ll make the decision on how to respond – not you.

With a startup, it’s all up to you. This obviously involves greater risk, but it does allow you to build something that’s all yours. You pick the branding colours, decide how to market your product, and have the freedom to tweak your approach however and whenever you like.

To some, this is the most invigorating part of being a business owner. To others, it’s a chore and, of course, another expense.

Ultimately, the way you feel about branding ought to play a big role in your decision to opt for a startup or franchise.

 

Ongoing support

 

 

Buying a franchise is like joining a club, whereas creating a company is like starting a new one altogether.

The great thing about joining a franchise is that you’re entitled to a fantastic support network. You’re making the franchiser money, after all, so the last thing they want is for you to fail.

Different organisations have their own structures, however, and it’s worth investigating support networks before investing.

A franchiser may provide you with a dedicated point of contact for various operational departments – either as and when you require them, or in more structured, regular periods of time. You need to make sure that the franchise’s particular way of providing assistance is right for you.

A lot of this assistance comes at the beginning of your time as a franchisee. Many franchisors have comprehensive training programmes that new partners undergo before they start running their own operation. This ensures you have all the knowledge and skills you need for a shot at success.

This blueprint does, however, mean you’re somewhat restricted in terms of decision-making. When you launch a startup, you can make your own moves as you desire; you have no-one to report to other than yourself.

There are lots of government-backed schemes to support entrepreneurs though, so you won’t be entirely alone when you get going on a startup idea. Although that’s not to say it will be easy…

 

Chance of success

 

For all the excitement of starting a new business, the chances of success aren’t good. According to statistics, about half the companies started in London last for no more than three years, but this has done nothing to deter Brits from giving it a go.

More than half a million new companies formed in 2017, despite the uncertain economic climate the country finds itself within.

Indeed, given how the financial future of the UK is unclear, it is reasonable to see why people are still hungry to buy into existing brands in order to reduce risk.

After getting past the initial hurdles, the proven franchise system offers handsome returns for the franchisee, teaching them new business skills along the way.

Ultimately, it all comes down to your attitude towards risk and reward. Startup owners can pull in millions or end up with nothing. Franchisees tend to fall somewhere in between. But, as is always the case in business, there are never any guarantees.

 

Conclusion: Which is best for you?

 

If you’re torn between setting up your own business or buying into an existing franchise, you’ll stumble across conflicting articles during your research. There’s no getting around the fact that there isn’t a foolproof, correct answer. If one path was the way to go, everyone would follow it.

Each entrepreneur is different, and you need to take your own personal tastes and preferences into account when determining whether to go down the startup or franchise route.

Setting up your own venture is fantastic if you have a ground-breaking idea and a desire to reinvent the wheel, whereas franchising is a far safer option for those wanting to wield their business skills without all the brand-building work.

In either instance, you’ll need more than a little luck to be a huge success, but there are steps you can take to tilt the odds in your favour.

Researching your market (and learning where you can add value) will make a monumental difference to your fortunes, whilst saving up a financial buffer for the worst-case scenario can save your skin if times ever get tough.

You’ll also need to be passionate about the industry you’d like to operate within, and have the belief needed to confidently sell your services or products to others.

Reading case studies and visiting current startups or franchises can offer a wealth of information as to their growth rate and issues they’ve come across.

For those looking at franchises, there are hundreds of different British businesses ready to buy into right now. Whilst fast food dominates the headlines in the franchise world, it’s important to remember that franchisees aren’t exclusively McDonald’s or Subway branch operators. Far from it, in fact.

Language school Le Club Français, beauty brand The Body Shop, and mobile phone retailer Carphone Warehouse all rank highly in the list of Top 500 European Franchises on Franchise Direct.

Rainbow are another perfect example. A specialist cleaning and restoration service with high customer demand all over the country, Rainbow franchisees have the opportunity to help individuals and businesses recover following disaster, keeping companies afloat by ensuring that their premises are safe.

If you think franchising is the best option for you, or you’d like to know more about working as a franchisee for a well-established, highly reputable organisation, head over to our Next Steps section to learn more.