Franchising vs. Start-ups

Now, before I continue posting more francise businesses. I think I should let you know the advantages and disadvantages of going into a franchise, or going into a start up business. Here is an article that explores the good and bad of franchise vs start up business. Should you get a business franchise? Keep on reading.

The dream of putting up one’s own business has become more pervasive in recent years. And why not? Considering the hard economic times when monthly paychecks are unbelievably stretched, and retrenchment looms just around the corner, the idea of having one’s own enterprise to rely on has become more appealing, even one of the best options there is.

Beyond the dream however, is the reality that most people do not know how to setp up a business, much less where to begin. What business will I get into? How much capital will I need? How do I attract customers? These are questions that are difficult to answer especially for a first-time entrepreneur. In these times of cutthroat business competition, the uninitiated businessman often loses before he even starts. One solutions to all these? FRANCHISING.

In franchising, the Franchisor, or owner of the business, offers his tried and tested method of doing business, often called “business format or model” for others to use in exchange for franchise fees and royalties. The Franchisee, or the one borrowing the business model, pays these fees in exchange for the right to use the Franchisor’s trademark, operations manuals and the privilege of being trained by the Franchisor himself.

A Franchised business has a better chance at success than an independent business because the Franchisee can learn from the years of experience of the Franchisor. Since there is less trial and error, it is almost like having no learning curve.

Guide on how to get a franchise business

I have received inquiries on this site, from friends, and from business minded relatives, mostly from OFWs  based in the USA and Middle East, and a few from those based in the Philippines who have enough savings,  on how to buy a franchise.  A plethora of questions are asked ranging from: how much capital do they need to buy a franchise, what is the best franchise, how to be a franchisee, how to franchise a business etc. etc.

I cannot avoid telling my friends and relatives that buying a franchise is akin to the “halo halo” or “the sari-sari store” mentality that we have.  Do not get a franchise because so and so friend or relative has one. The impression I am getting is that having a franchise business has become a status symbol for some people, hay naku hehe. IMO, it is best to develop a business concept and start developing it and be the seller of a franchise than be the franchisee.

Below is a comprehensive tips and guides if you are planning of getting a franchise business.

  

Advantages and disadvantages of a franchise

I have nothing against buying an existing and successful franchise like Jollibee or Seven Eleven as they provide many advantages. Buying a franchise can be a quick way to set up your own business without starting from scratch. But there are also a number of drawbacks.

Advantages

    

• Your business is based on a proven idea. You can check how successful other franchises are before committing yourself.
• You can use a recognized brand name and trademarks. You benefit from any advertising or promotion by the owner of the franchise - the 'franchisor'.
• The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice.
• You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory.
• Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation.
• You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network.
• Relationships with suppliers have already been established.