Franchise or New Venture? That Depends on You. Here are some quick gut checks and questions to ask yourself to determine what path you should embark on.
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"Should I start a franchise or start my own company?" This is a very tough question, as successful franchise ownership requires a very specific mindset. Most successful franchise owners are able to effectively combine a strong entrepreneurial spirit with a willingness to follow proven systems.
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That combination is hard to find and a franchisee who lacks either attribute will likely struggle. The franchisee who lacks an entrepreneur's dogged determination will have a tough time dealing with profit-margin fluctuation and other business-ownership risks. The franchisee who lacks the discipline and desire to follow franchise systems will alienate him or herself from the franchisor and fail to deliver experiences customers expect from the brand.
Now, at the risk of oversimplifying this very complex process, we'll start with a quick overview to help franchise prospects determine if it makes sense to stick with their job, pursue franchise ownership or launch their own business. Consider the following statements:
Employee: If the risks of business ownership scare you and you lack an entrepreneurial spirit, business ownership is likely not for you, whether it be your own or a franchise business.
Creative entrepreneur: If you possess a creative mind that feels constricted by boundaries and models, starting your own business is likely your best bet.
Executive entrepreneur: If you are comfortable operating within a proven system and value support over autonomous freedom, franchising may be for you.
Of course, you should not make your decision based on which bullet fits you best. Those are simply conversation starters meant to help you explore your skills, personality, preferences, etc., in depth. Should you be serious about owning a franchise, I would recommend working with a franchise coach who can help you explore companies that fit your needs.
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Here are the first three questions you should consider when deciding between owning a franchise and owning your own business. Use these as reference points when discussing business-ownership options with a franchise coach.
Are you an entrepreneur at heart? As mentioned above, business ownership of any kind requires an entrepreneurial spirit. You must be willing to act swiftly, lead confidently and accept full responsibility for your business' future.
How much control do you need over the business? Access to an established brand and proven systems are two of the biggest advantages associated with running a franchise business. However, franchisees must devote themselves to training and follow the franchise model willingly to truly benefit from the franchise brand. If you constantly seek to make changes/tweaks to improve systems and prefer total control, franchising is probably not for you.
How much risk are you willing to assume? Buying into a franchise system allows business owners to minimize the risks they face as a business owner. In return for a monthly royalty fee, franchisees receive significant support from their franchisor.
Support falls into the following categories: training and support, infrastructural backbone, franchisee community and re-saleability. Together, these categories represent the value proposition of franchising. However, even the best franchise system still requires successful business operation by each franchisee at the local level. The risk associated with this is something that must be a motivator for you.
Remember -- this is a very tough decision. While these questions can certainly help you determine whether business ownership is for you, they do not help you determine what kind of business is right for you.
Be sure to surround yourself with an excellent team of advisors who can help you pinpoint a viable business-ownership opportunity.
Related: Buying a Franchise? When You Need to Worry About Location.