Buy a Franchise or Start a Company?
The Wealthy Franchise works primarily with franchises however we also consult to small businesses who are looking for serious help with their brand, website, sales and marketing as well as social media. Our team of successful professionals offer unique advantages of experience and hard work. We understand the technology industry, hospitality including restaurants, hotel, private clubs, legal firms, the printing industry, nutritional stores, recreational and accounting practices with over 300 solutions over the past 12 years.
Whether to buy a franchise or a business requires factoring in several decisions:
When you start a company, it can take years to achieve success at brand awareness and it costs a lot of money as well as many, many hours of your time. If you purchase an existing brand such as a franchise, you have instant recognition. In fact, many excellent franchise fees are less than $50,000.00 which can be great deal for you as the franchise owner. If you are starting up a bricks and mortar business such as retail, either way you have to sign a lease and do a substantial makeover of the space you rent and buy furniture and equipment. The main differences are the franchise fees and royalties that are paid back to the franchisor. The brand however has been established, leading to instant recognition in most cases.
Managing the Business
As an owner of a private business, admittedly you do have the autonomy to make almost every decision. Of course the products you sell may have conditions including price, display etc so there are some restrictions. The franchise you buy has a “rule” book and you need to accept the systems that are already in place. Of course there are reasons for these procedures. They may have been proven at hundreds of locations and have an existing track record. Why not take advantage of this success?
These manuals hold the key to success within any franchise. Those franchises who exert strong influence on how you run the business do so because following a system works. Starting up a business is a great idea… if you have the time and money to spend building the business. Cash flow may be tough in the beginning because without instant recognition of the name, clients won’t automatically walk in the front door or pick up the phone.
Most franchises that have been around a while have tested the legal boundaries already so you don’t have to. It is always recommended you have a lawyer go over the franchise agreement so you understand the documents entirely. You also have the weight of the franchise behind you if you do get into some issues regarding legal aspects. When you acquire an existing business you may not know what previous troubles lie underneath the surface. When you start your own business, you may encounter problems with patents, naming and more that could derail your start-up. Franchises abound for these reasons alone…because you aren’t in it alone.
If you are launching a small start-up working out of the proverbial “garage”, you can likely keep the costs down significantly in the beginning. Score this round for owning the business outright. However if you want to see a financial return and build your company quickly, a franchise may be the best way. It’s always good to speak with your bank for advice. Ask them if they view a known franchise versus buying a small company to impact their lending decision. Very likely, either way they will require collateral. Yet some banks look at franchises as having a higher rate of success.
We’ll cover marketing and other concepts in a future post. Buy a Franchise or Start a Company? What have you decided?
Text us today at The Wealthy Franchise
Alistair @ 778-676-3808 email email@example.com
If you are unsure whether to Buy a Franchise or Start a Company, we are currently representing:
…and some others in the food and beverage industry.
Our franchisors cover Canada and in some cases the USA.