Franchise or Startup? You Decide.

Franchise or Startup? You Decide.
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Consultant at Franchoice
4 min read
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The U.S. economy is gaining steam, and while more people are heading back to work in a traditional employment setting, others have decided the timing is right to venture out into the world of small business ownership.

And why not?

Today, there are almost 28 million small businesses operating in the U.S., and while many of them began with dreams of becoming their own boss, what that business becomes will depend on the person in charge and the business model they choose.

Related: How This Franchisee Went From Employee to Owner

As a franchise consultant, I take candidates through a rigorous process of self discovery to determine if they would be better served starting their own business or pursuing a franchise. With hundreds of thousands, if not millions, of dollars at stake, determining the answer to that question is a critical first step toward being a successful entrepreneur.

Both franchising and startups have their advantages, but the best way to determine which business model will suit you is to know your own strengths, skills, life plan and dreams. Someone capable of thriving in a startup may feel too constricted operating within a franchise model, while someone else who could succeed inside a supportive franchise system may wither under the pressure and risk of going it alone.

Wonder which business model is right for you? Here are five indicators you’d be an excellent candidate for franchising, followed by four that indicate you’d be better off starting your own business.

1. You like working within a system.

At its core, the value of a franchise is its proven model of success. While a franchisee is responsible for the day-to-day operations of their franchise, they operate within a system that provides operational support, marketing and training.  

2. You want to win now.

Beyond the proven model of success, franchises offer brand awareness, which means customers are more likely to be familiar with your product or service from day one. If you’re on the back end of your career, franchising might make sense.

3. You don’t want to reinvent the wheel.

It’s common for most people to be unsure which franchise is the best fit for you. With more than 3,000 franchises available, selecting one that fits your skills and life goals is much easier than trying to figure out a business to start by yourself.

4. Scalability is appealing.

With many franchises, if you can successfully operate one store, you can successfully operate multiple stores. Though it is certainly possible to scale a startup as well, it will likely happen faster through franchising because the blueprint is already in place.

5. You’re not quite ready to leave the job force yet.

For people that are looking to work their way into entrepreneurship without giving up their day job, there are several semi-absentee franchises worth exploring. A semi-absentee model allows you to work on the franchise for 10-15 hours per week while continuing full-time employment. Then when the time is right, you can exit your day job to focus entirely on your business.

Related: This Franchisee Has Learned 'How Sweet It Is' to Be in Business for Herself

If none of these features appeals to you, here are some reasons you might be better served starting your own business.

1. You want the freedom to do things your way.

Working within a franchise system means following certain guidelines in order to keep your franchise license. If you’re someone that wants to do everything your way, franchising could feel too restrictive.

2. You already know what you want to do and how to do it.

If you’ve already got your business model and are confident that you know how to make it succeed, paying a fee for a franchise’s business model may sound unappealing.

3. You’re skeptical of franchising.

Franchises are expected to account for almost $900 billion worth of economic output this year, according to the International Franchising Association. A recent survey by FranData found a 94.2 percent renewal rate among current franchise owners. However, some people just can’t accept franchising as a good path to business ownership. That’s OK, but if you realize you’re one of those people, franchising probably isn’t right for you.

4. The higher risk and problem solving opportunities excite you.

Are you someone who loves it when things go wrong because it gives you the chance to figure out the solution? In many ways, franchising is like a giant safety net because they already have best practices in place. When you’re running your own business, all of the problems are yours to solve.

Related: Why We Opened a Different Take on the Classic Salon Franchise

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