Franchise or Start From Scratch?

[bns]

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One common question that's being asked when planning to start a business is whether to franchise or to start your own brand. In order to answer this question, it is best we first define a franchise and identify the pros and cons of the two.

Franchising is simply described as using the name and the system of an already existing business. The two key players in a franchise is the franchisor and the franchisee. The franchisor usually puts up his business for franchising in order to quickly expand and lower its risks by letting the franchisee put up the capital to operate another branch of the business.

Franchising would allow you to start a business using a proven system and a known brand. Suppliers are no longer an issue and marketing costs will be minimal. This is good for entrepreneurs who are just starting to learn how to do business.

However, franchising often entails additional capital and lower profit margins as compared to a business that is started from scratch. You may have to pay the franchise fees, bonds, monthly royalty fees, marketing fees, and all other fees that your franchisor may require. Often times, the franchisor may also impose penalties for violations like substandard product preparation, nonstandard materials being used, and the likes. You may even feel like a patsy, controlled by the franchisor and making them more money, but all that is part of the business.

Although everything is already provided, franchising does not guarantee success without the right location and proper management by the franchisee.

When you start a business from scratch, you will need to come up with a solid business plan, a good system, and a good marketing plan. You will then have to look for trusted suppliers who can steadily supply you with your needs. You would also need to find a way to standardize your products so that the quality will be consistent. This would take more time to develop and the risk is higher.

The cost in putting up your own business from scratch would require less capital than a franchise since you don't have to pay for any exorbitant franchise fees. You also don't have to pay for royalty or any other fees that are present in a franchise. If you use a nonstandard materials, no one would impose penalties.

Which one should you choose?

You have to consider your expertise in the business you plan to put up.

If you are a beginner who does not know much about running a business but have the willingness to learn and the passion to succeed, then franchising might be a good option for you.

If you know a lot about it and have the knack for creating a system, then by all means start from scratch. Who knows, you might come up with a business that would be great for franchising.

You may even combine both if you want. For example, franchise a business in order to learn the system and how everything works. Scrutinize and learn everything you can about the business. Then develop a business from scratch and franchise it.

Regardless of your choice, be open-minded, learn everything you can, stay grounded, and don't give up even if you fail.
Be creative, then perhaps succeed and expand your business to hundreds of stores just like JB.

[marrythomas]

Franchise business is the very powerful way to expand your business. Many owners see franchising is natural next step to grow our business. Many of the brands that are very popular all over the world started as a small family business and through franchising have turned out to be popular.

You need to have knowledge about how franchise works in the right manner to ensure success to franchise your business. Thus, you can consider franchising your business if you have dream of making your business big and successful.