This article are provided for information purposes only, and are not intended as legal advice.


What is the difference between buying a franchise and buying an independent business?

March 18th, 2010

Ever wonder what you should buy?  Do you buy a business or buy a franchise, which one if better?  Keep in mind, a franchise is a business, it is a specific type of business model.  Other than that, buying a business which is a franchise vs an independent business is very similar.   A franchise and an independent business both have customers, both have sales, both could be in the same industry however a franchise may have a better brand recognition than an independent business but not necessarily.  A franchise will cater more to the masses whereas an independent business may be a niche player or cater to the masses.

 

A franchise is a model which has been developed and hopefully perfected by a master franchisor.  They have figured out what works, what does not work, the price point of the selling price, how to organize the business and how to run the business.  You as a franchisee must follow the guidelines in order to be successful.  Too many people buy a franchise and hope that they can change it to what they want the franchise to do.  Usually this ends up in failure because the franchisor probably has seen what you are trying to do and knows the outcome of your action before you do. It is the franchisors business to keep perfecting the system which they have developed.  They have the resources, they have a large test sample base to work with.  Too often, a rogue franchisee is a problem franchisee and often do not succeed because they refuse to follow the systems put in place by the franchisor.

 

On the other hand, when you buy an independent business, you can do whatever you want to the business.  You have total freedom of pricing, sourcing of product, your business hours, how you do work, when you do work, who you hire, what you wear, how you market and go after customers, you are not restricted by a geographic location/territory.  You have considerably more freedom and not structure. This is great for many people who think independently however for those who have never had a business before, want and need to have the resources at their finger tips so that some one can answer questions for them and give them continual guidance, a franchise is a better way to go.

 

Which one can make you more money?  That is the million dollar question.  Some franchises are extremely profitable but their are others which are marginally profitable and the profits are relatively meager compared to the time, energy and capital invested in the business.  Pick your business, whether it be an independent business for you to buy or if you do a franchise, in both cases, you need to do your homework to determine if either of these businesses meets your expectation.


Filed under: Buying a business,buying a franchise — Gary Landa @ 8:41 am


No Comments »


No comments yet.


RSS feed for comments on this post. TrackBack URL


Leave a comment


You must be logged in to post a comment.