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Should You Buy a Franchise or Start Your Own Small Business? Ask Yourself These 5 Questions First. In other words, are you an entrepreneur... or a systempreneur?

By Alicia Miller

This story appears in the January 2023 issue of Entrepreneur. Subscribe »

Mariaelena Caputi

Franchising sounds great, in theory: You can have your own business, where you're the boss, while also operating inside an established brand that's committed to helping you be successful.

But wait. Before you go any further, there's an important question you must answer about yourself: Are you an entrepreneur or a systempreneur?

Here's another way of thinking about it: Do you want to start a business…or own a business?

In my work consulting for those in the franchising industry, I often ask people this question. The distinction is important — because the answer can predict whether you'll be happy and successful as a franchisee.

Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

Some people love to invent. They have a unique vision and want to bring it to life — building not just a new product or service, but also the team that supports it and the system that executes it. This is hard, rewarding work. If it's what you dream of, then franchising probably isn't a fit for you. (That is, unless you plan to start your own franchise concept and bring it to market!)

There's another way, however: If you simply dream of running and owning a business, where your daily focus is driving profitability, growth, scale, and impact, then you might be an excellent franchisee.

The franchise model was designed with exactly this type of operations-and sales-focused entrepreneur in mind: I call it the systempreneur. Strong franchisees are also typically good at managing people, listening, sharing, learning, and collaborating — in other words, fitting great people into thriving systems.

This requires an open mindset. A systempreneur must see opportunity and have a can-do approach. You will be following someone else's system, so it's critically important to make sure you are prepared to do just that — and that you are prepared to work with them every step of the way.

Related: Franchising Isn't for Entrepreneurs, It's for Systempreneurs

Working in the system

It's often said that franchisees are in business for themselves, but that they are not alone. This is true in ways that new franchisees may not fully appreciate.

For example, many self-identified systempreneurs will say they're prepared to follow a system — but are they also ready to share their activities with a corporate office, and have their tax returns monitored? They better be. Because that's often part of being a systempreneur too.

In my experience, many franchise agreements require that franchisees share their financial statements. This is to help the team monitor unit-level performance and ensure that help is reaching any struggling franchisees. It is also required so that the system can report unit-level performance in the Franchise Disclosure Document, should the franchise choose to report its financial performance.

Franchisees must also follow a brand's rules and operating standards. This isn't just a matter of being a team player; these standards are often critical to the business. Some of them are legal issues, such as health and safety standards. But others are more related to a brand's identity, such as the fixtures and colors you're permitted to use in your business location and advertising.

As a franchisee, I once had to spend $10,000 to move a huge wall in one of my franchise locations, because the corporate approval manager wanted the site to have a particular look. The location of that wall never generated a penny of income for me, but it still cost me a small fortune to move. Was that annoying? Sure. But it was also part of the deal, and I understood that. Now ask yourself: Are you prepared to live under someone else's rules this way, and can you move forward even when decisions don't go your way?

An even bigger question: Are you prepared to make that sacrifice indefinitely? Because franchising does not stand still. A business's operating model will evolve and change to keep up with competition and new customer demands. You will be expected to keep up, too. Sometimes that will mean additional spending or rolling out new systems or products that didn't exist when you originally signed your franchise agreement. The ability of a franchise system to evolve with the times is important, and is only as strong as franchisees' collective willingness to follow the new system.

View the 2023 Franchise 500 Ranking Now

Find out if you're a true systempreneur

Still unsure if you're ready to join a system? I've built an assessment to help.

The following questions and thought exercises are all about you and what you're trying to accomplish in business. Figuring this out is an extremely important step in your franchising journey. Without this introspection, you're likely to lose sight of your objectives later.

Take the time to invest in yourself by really working through these questions. Talk through your completed answers with the people in your support system and with those who know you best both professionally and personally. Look for any blind spots in your self-assessment.

Related: 5 Honest Truths About Starting A Business

Here are the questions:

Do I dream more about starting a business or running a business?

Can I follow a system and playbook, or do I prefer to try to change things?

Can I ask for help and accept advice from others?

Am I comfortable reporting on my results and being transparent about my performance?

Am I comfortable with the fact that the corporate team will have the final say to enforce brand standards, and that
I may have to go along with decisions I don't agree with?

Am I prepared for the required operating model to change during the period of my franchise agreement?

As you complete these thought exercises, make sure that your family is on board with your desire to run a franchise business as well. If they understand your objectives, it is more likely they will support you, so you don't have any last-minute surprises.

Get to the root of what you're trying to accomplish. If you don't know where you want to go, how can you build a plan to get there? Franchising is a terrific business model, but it needs to fit your goals and your desired working style.

So now I'll ask it again: Are you an entrepreneur…or a systempreneur?

Related: Here's How You Can Tell Which Franchise Opportunity Is Best for You

Alicia Miller

Entrepreneur Leadership Network® Contributor

Founder & Managing Director, Emergent Growth Advisors

Alicia Miller is the founder of Emergent Growth Advisors and author of Big Money in Franchising: Scaling Your Enterprise in the Era of Private Equity. She advises franchisors and multi-unit operators on growth and transformation challenges and advises private capital firms pre- and post-transaction.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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