Buying A Franchise VS An Independent Company
Posted on 9th August 2022 at 14:26
Many of us dream of being our own boss and owning a business. A huge consideration for someone looking to buy a business is whether to purchase an independent company or to buy into a franchise. Much of the decision will be based on the skill set of the potential business owner and what their long term goals dictate. We are going to talk through the pros and cons of investing in each business type to help you to understand your options fully.
Do you want to be in charge?
Buying an independent company means that you are fully in the driving seat and can ditch any part of the operation that is not profitable. Operating a business model where you can buy and sell how you like and capitalise on trends in the market, can be extremely rewarding. However, some of your decisions may have to be based on trial and error, so there is always risk to factor in. Financing an independent business can be harder as the bank doesn't know whether the venture will be profitable. Therefore, it is sensible to get all of your ducks in a row if you are preparing to talk with a lender.
Here are our top 6 benefits to independent ownership
follow your dreams, your way
if you are excited to develop something from the ground up, this way you can do so
use your skills and experience to make a success of things on your own
you have the ability to analyse and change your offering based on the market
no one else controls your business
with due diligence, and the right economic conditions you can make a success of things in your own right
Are you happy to operate according to someone else's rules?
If so, then a franchise is worth considering. They are popular and with 48,600 franchises in the UK, you would be in good company. From training and support, to marketing and networking opportunities, there are many pros to this business model. However, the franchisor is ultimately in control in terms of how you operate. Some people are put off by the initial cost of a franchise, however once you realise that many people go on to own multiple franchises, coupled with the popularity of business ownership in this way, the costs very often lead to a profitable business.
Here are our top 6 reasons to own a franchise
the business model is established, as is the brand
initial and ongoing support
less risk than going it alone
higher success rate than independents
strong networking opportunities
It is interesting to look a different sectors and particularly how they have grown over the last year as this article from Elite Franchising predicted. People tend to think about the big franchises like McDonald's and fast food chains, however many local cleaning companies, for example, are part of a franchise. In fact, 80% of the UK franchise market is UK owned and developed according to The Franchise Company. One of the main issues that comes up on forums for franchisees' is pricing. The very nature of a franchise is that the customer experience is very much the same, wherever they are based. This can be problematic as in the UK, the market and economics vary from region to region. If your business plans include an aggressive pricing strategy and it is important for you to be in control of key areas, then buying an independent business may be the way forward.
Ultimately, whichever route you decide to take you must get independent financial and legal advice before committing. This page which covers,
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