Stepping into the business world is a significant undertaking. One way is to start a personal business, and the other is to buy an existing one. A person can also purchase another business’s franchise with a copyrighted brand name. Every business option has its pros and cons, making choosing the correct business option difficult.
The pros and cons of purchasing a franchise and running a personal business can be understood with self-assessment. The questions to answer personally are:
- Am I ready to follow the assigned rules and regulations of a franchise?
- Do I want to have the freedom to experiment with an innovative idea?
In essence, does the business owner want total independence or want to follow an already made system of operations? This is the choice where individuals can get confused and make an error. When it comes to cost and benefits, there is generally a specific value the owner will have to pay to purchase a franchise. However, the same may not be true for starting a personal business. The following advantages and disadvantages should be considered:
Brand consciousness
No matter where an individual travels, he will find the same taste and customer service at any McDonald’s or Subway all over the globe. The franchise’s law of replicability and uniformity guarantee this service and taste. Customers are aware of this rule and follow their favorite brands as a result. Franchised brands have maintained their image over time and gained the trust of their customers in the process.
Regulator/independence
A person starting a personal business must control everything individually with complete access to and control of every detail. When buying a franchise, a person must keep up with every single rule laid out by a franchisor. The key point to remember is that franchisees are not the owners of the franchise unit. They are given a license to use the brand’s name, equipment, uniforms, operating system, etc. A franchise owner controls hiring and firing employees but must follow the brand’s rules and implement its approved culture and values.
Operating system
An individual must understand what is necessary when buying an operating system or inventing one. Starting a business is perfect for an individual with an innovative and creative mind that wants to develop meaningful standards. Instead, a franchise offers a system that comes with a structured manual for handling daily tasks.
Equipment and supplies
Supplying the personal business with essential equipment requires a proper study of what is needed to produce and monetize goods or services. Overbuying and under-buying are common for new business owners. Understanding supplies is essential for any personal business owner. A franchise provides aid for the franchisee to purchase the proper equipment.
Economy’s Scales
A personal business owner must make efficient decisions regarding purchasing goods. For a franchise, the brand provides negotiation on bulk orders and helps the individual to save money. With the brand as a backup, the franchise can manage increasing credit efficiently. Having the trust of the franchisor builds customers as well.
Legal exposure
It is legally necessary for franchisors to reveal precise information about the financial health of their business. Asking oneself questions are essential and should include:
- Is the franchise trustworthy to buy?
- Is there a backup plan once the seller disappears?
If facing a franchisor in court, the franchisee must have ample, accurate legal information.
Financing
Starting a personal business can cost less instead of purchasing a franchise. Many individuals have started out with a small budget and succeeded tremendously. Retail space and equipment are essential for a new business, while many franchisors do not provide financing to their franchisees.
Final verdict
Running a personal business can require a lower initial investment while purchasing a franchise requires a significant investment. A person buying a franchise has to follow a specific set of rules. However, personal business startups need freedom and courage to take the initiative.
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