Being an entrepreneur in 2022 isn’t easy. It takes perseverance, hard work, dedication, passion, and a golden idea. But the freedom and flexibility that comes along with being your own boss attract many business people to the idea of starting their own company.
One way to make your entrepreneurial dreams come true while minimizing the financial risk is to consider opening a franchise instead of starting your own business. Whether you’re already an established entrepreneur looking for new opportunities or you’re dreaming of opening a business and need a little extra guidance, this guide is for you. Keep reading to decide whether a franchise is the right opportunity for you.
First things first: what is a franchise, and how is it different from starting your own business from scratch?
A franchise is a business opened by an individual (the franchisee) who enters into a license agreement with a corporate brand (the franchisor), allowing them to sell a product or service using the franchisor’s business name, processes, and trademarks.
Both franchisees and franchisors benefit from the symbiotic franchise relationship. Franchisees gain a competitive advantage that comes with an established brand. They may also receive marketing, training, business and operation support, and supply chain assistance. In exchange, franchisors are paid an initial franchise fee plus royalties from sales.
Common franchises you are likely familiar with include fast-food giants like McDonald’s and Taco Bell. However, there are franchises in a wide variety of industries, from beauty salons to cleaning services to consulting firms and more.
There is a fine line, if any, between a franchisee and an entrepreneur. Depending on whom you ask, you may get a different answer. According to the dictionary, an entrepreneur is an individual who organizes, manages, and takes on the risks of opening a business or enterprise. So, does a franchise owner fit the bill?
A franchisee must possess the same skills as an entrepreneur, such as being disciplined, steadfast, and organized. They must handle the financial and managerial aspects of running a business and make many important business decisions every day. They are also taking on the financial risks of opening a business and will enjoy the rewards if that business is successful.
However, according to some, an entrepreneur is an innovator who creates a new business with unique goods or services. When considering this aspect, the franchisor is the entrepreneur who developed a unique brand and originally got it off the ground.
Still, there is plenty of room for innovation when working with a franchise. While there are clear and strict guidelines regarding franchise procedures, each franchisee can implement unique marketing strategies or bring new ideas to the franchisor.
There is no shortage of people who are yearning to be their own boss instead of answering to someone else. Running your own business is one of the most profitable ways to do so. But if you want to start your own small business, you’re not alone.
Fundera released some statistics they collected from agencies like the US Small Business Administration, US Census Bureau, and National Small Business Association and reported that there are 28.8 million small businesses in the US. The first few years of a company being in business are the hardest, and Fundera wrote that only one-third would survive for at least ten years. Those aren’t the best odds.
You can improve your chances of success with a new business by buying into a franchise. Your investment gives you access to a proven brand, process, and business model that has survived the test of time. This doesn’t mean that franchises are a foolproof way to make money. It is still essential to do your research and make wise business decisions when deciding which franchise is right for you.
On top of a better chance of success in your ventures, working with a franchise has some additional perks compared to starting your own business.
Despite all the advantages and perks of opening a franchise rather than starting your own company, some key aspects might frustrate those with the entrepreneurial spirit. The main downside for many is the lack of total control over the business.
Each franchise agreement is different, but franchisors typically have control of aspects such as product and service standards, where and how to operate, and financial reporting. This lack of creative freedom can be frustrating for some entrepreneurs and can sometimes cause conflict. On top of this, the franchisor will be interested in seeing the financial situation of each franchise.
How much control a franchisee has varies from one franchise concept to another. This information can be found in the franchise disclosure document (FDD). Entrepreneurs should consider the FDD as well as the following other aspects of a potential franchise when shopping around for the right opportunity.
If french fries aren’t your thing, don’t worry! There are many non-food franchise opportunities out there and in much less saturated markets. The best way to choose a franchise that will be successful for you is to pick a business that aligns with your personal strengths. Entrepreneurs have developed specific skills that make them ideal candidates for business consulting franchises.
Entrepreneurs excel when they possess certain hard skills like business management and financial skills. But another common feature of entrepreneurs is that they’re excellent at strategizing new ways to improve the bottom line. These skills make entrepreneurs the perfect candidate for starting a cost reduction consulting franchise like P3 Cost Analysts.
If you’re an entrepreneur who wants to utilize your strengths while churning a profit and positively impacting your client’s business, visit our franchise page to learn more about franchise opportunities with P3.
Successful franchise owners can come from all walks of life, but entrepreneurs have a strong foundation that will give them a head start and help them succeed as a franchisee.
While starting a franchise might not be fulfilling for all entrepreneurs, for those who are interested in starting a business with some helpful guidance, a franchise might be just the right move.
By opting for a franchise instead of creating your own business from the ground up, you can minimize your financial risk while still becoming your own boss.