5 Advantages of Being a Franchisee versus an Independent Business OwnerFor people who want less risk, more support and instant branding, buying a franchise may be the way to go.
Owning a franchise isn’t for everyone. It requires strict adherence to someone else’s guidelines, product specs and processes. This poses a challenge for many creative entrepreneurs.
But, when it’s a good fit, franchises offer a slew of benefits, from a proven business model to built-in marketing support. Consider these five advantages when you’re weighing your options.
Independent businesses face the hurdle of trying to attract customers, and they have to start from scratch with their marketing and brand storytelling efforts.
One of the biggest draws for franchisees is that the business’ branding is done for you. If the franchise is well known, customers already recognize what that business does and know what to expect when they visit.
“You’re getting a brand name and intellectual property, with marketing, recipes and systems that have worked well in the past,” said Mark Siebert, founder and CEO of iFranchise Group, a consulting group that has worked with more than 500 top franchise companies. “And you’re going to avoid mistakes because people already made them.”
Networking and support
As a franchisee, you have two groups at your disposal for help and advice: your fellow franchisees and your head office. Many franchisees say that having a community to turn to is a big advantage over independent businesses that operate on their own.
“I’m able to pick up a phone or send an email to other franchisees or knowledgeable people in the franchisor office to get solutions to everyday problems and compare notes,” said Doug Higdon, owner of two Golden Corral franchised restaurants in Kentucky. “And we receive reports on a regular basis to see how we compare to the system and to other franchisees in the critical measurements of our business.”
Bob McQuillan, vice president of franchise development for Hand & Stone Massage and Facial Spa, who also owns three locations in the greater Philadelphia area, added that there is an attitude in franchises that everyone is in it together.
“Group collaboration is a wonderful aspect,” he said. “You get a great network of fellow franchisees who should be willing to help you achieve success, since your success will affect the overall brand.”
According to Higdon, franchise businesses can leverage economies of scale, which translates to some lower business costs. The chain can negotiate bulk purchase prices for equipment, food, uniforms and smallwares.
“You can run more efficiently, with lower costs, than an independent business,” Higdon said.
Pooled marketing costs also help franchisees. Hand & Stone’s McQuillan said most franchises charge franchisees an advertising fee as part of their gross earnings. This goes toward both local and national marketing campaigns to extend the brand’s reach.
Mitigating some risk
Whether it’s a franchise or independent business, there will always be risk associated with starting a business (and don’t believe the commonly quoted, flawed statistic that 95 percent of franchises succeed). But McQuillan said he has found that the time between investing in a franchise and opening can be shorter with a franchise, and overall, it is a model that owners find to be safer.
“You are likely to invest in a business with a higher chance of success, as you’re investing in a replicable business model,” he said.