• Expert Advice

When venturing into your own business, you ultimately have two options: starting your own independent brand or opening a franchise from an existing company or established brand. Independent businesses have complete control over all aspects of the business, whereas with a franchised business, you are merely implementing tried and tested methods. However, there are various benefits that an independent business may not have. In this article, we explore eight benefits that a franchise business has over an independent business.

Established brand recognition and tradename

Franchises often have well-established brand names that are distinguishable from other competitors in the same industry. This makes it easier to attract and retain customers. However, customers should be made aware of local ownership. As a franchisee, you have the right to use an established trade name, marks, logo, and style.

With an independent business, you will need to establish your own name, which can take a long time. As they say, “In business, time is money.” The name will not be national, but customers will be aware of local ownership.

Proven business model and package

Franchisors have tried and tested their business model to ensure its success before rolling it out to franchisees. This makes it easier for franchisees to be successful and profitable if they implement the model and utilize the package developed by franchisors, as well as being committed and dedicated to their business venture. With independent businesses, the business model will be new and unproven – it will be your responsibility to establish the likelihood of success.

Franchises offer irrefutable evidence that the business has worked well in other locations, which can reduce the risk of failure and increase your chances of success. However, this does not guarantee that it will work everywhere. Every franchisor should conduct a viability study in your target market.

When you invest in a franchise, you are investing in a complete business format that has been proven elsewhere and possibly even has an established following in your target territory. If you are developing an independent business, you will have little external support. Your business is likely to start small and will require time to develop. In the meantime, overheads are building up, not to mention lost opportunity costs.

Known product and service

In an established franchise, your product or service will have public acceptance. This is a major benefit if the entire network has a sound reputation, but it could be a drawback if other franchisees within the network perform poorly. New independent businesses take a long time to establish a product or service that meets the needs of their target customer base and to build up public acceptance.

Training and support

Franchisors offer initial and ongoing training to franchisees, which is essential. This training provides you with the ability to use new technology, handle financial and staff management, and gives you the confidence and skills required to operate a business successfully and efficiently. The training covers various areas, including brand knowledge, marketing, operations, customer service, and product and service knowledge. In contrast, an independent business will be based on your skills or hobbies. Business results will depend entirely on your capabilities and dedication, with no one to guide you.

Franchisees have access to a network of other franchisees who can provide support and share experiences or best practices. You will also have access to an operations and procedures manual. In appropriate circumstances, a troubleshooting service may be available. Moreover, a field service consultant (FSC) will visit you and offer on-site assistance. In an independent business, you are on your own – the buck stops with you every time. You could hire an outside consultant at a price, but they are unlikely to be familiar with your specific needs.

National, regional and local marketing support

Franchisors provide marketing support to franchisees, helping them reach a larger audience and attract more customers. National advertising is the responsibility of the franchisor, while local advertising will be undertaken by you. However, the franchisor is likely to offer guidance and even provide advertising materials.In an independent business, marketing is entirely up to you. You have to devise and produce your own material and are responsible for media selection. Moreover, you are unlikely to qualify for discounts often offered to large groups.

Bulk purchasing power

Franchisors will specify the range of products and/or services you will carry. Occasionally, franchisors may be the sole source of certain supplies. Either way, you should be able to benefit from bulk discount arrangements negotiated by the franchisor on the network’s behalf. With an independent business, you are free to determine the range of products and/or services you wish to offer. Moreover, you can shop around to get the best deals. However, since you will be buying in small quantities, at least initially, you are unlikely to receive substantial discounts.

Assistance with selecting the right location and site

The franchisor should assist with selecting the optimal location for the business. In any event, the franchisor will reserve the right to approve the site. As an independent business, you are free to make good or bad choices in site selection and have to live with the consequences. Expert advice may be available, but it comes at a price and it is unlikely that the expert fully understands your needs.

Ownership considerations and selling the business

In a franchise, although you own the business, its operation is subject to the clauses contained in the franchise agreement. Among other things, your right to sell the business is likely to be limited. The franchisor may reserve the right to purchase the business from you or approve the incoming franchisee. Keep in mind that franchises are usually granted for a fixed period, with a right to renew, then it is back to the negotiating table. Independent businesses are free to sell or dispose of the business at any time to anyone. No one else has the right to terminate the business as long as it is solvent. With a franchise, should you wish to sell the business, the franchisor may be prepared to purchase it from you or may have a buyer lined up. If you own an independent business, you have to find your own buyer.

Also read: Benefits of a Franchise Business

Also read: Franchising, a Business Opportunity with Benefits 

Conclusion

Franchising offers various benefits over independent businesses, including association with a well-known brand and its recognition, a well-developed business model and package, established products and services, structured training and support initiatives, bulk purchasing power, and assistance with site selection, among other advantages. While independent businesses offer freedom and control, they come with significant risks and challenges, such as developing a brand from scratch without support from a network.