Start A BusinessStartupDeciding the Right Path: The Pros and Cons of Startups and Franchises

Deciding the Right Path: The Pros and Cons of Startups and Franchises

Are you fed up with working for someone else and desire to venture out your own? Luckily for you, there are a few different options to consider. Startups are popping up all over the place, and while they can be modern and lucrative, they are also risky. On the other hand, franchises can offer financial stability, but they don’t come with a flexible business model.

So which do you choose? Below are the pros and cons for both startups and franchises, and some things to consider when deciding which one is right for your future. Being a self-starter in America is attractive in our collective identity, and there’s a lot of support for those who want to pursue that direction.

startupsStartup Pros

  • Professional freedom: Starting your own business means that you can work at any time from anyplace you choose. It’s flexible and there’s no limit to the potential growth of the business.
  • Total creative control: Run the show exactly the way you want to. There are no boundaries and the most innovative products and services emerge from these conditions.
  • Less expensive than associated franchise costs: Put up what you can afford. Some businesses need less startup money than others.

Startup Cons

  • A high rate of failure: It’s no secret that startups are risky. 25 percent of startup businesses fail within the first year, this number jumps to 50 percent within five years.
  • Long, difficult hours: You have to put more than 100 percent of your time and resources into your business. There is no one else to pick up the slack.
  • No training support or expertise: So much is unknown in the early stages of a startup. You won’t have upper management or executives to train and cultivate your employees. All the expertise must come from you.
  • Building a brand is time-consuming and expensive: Marketing your brand is crucial to stimulate growth, however, brand recognition doesn’t happen overnight. Make sure you’re prepared for this commitment.

Franchise Pros

  • Brand recognition: In a franchise setting, you’ll have brand awareness from the get-go, all due to the name alone. Customers are already familiar with your product or service, and the franchise will have a loyal customer base.
  • High success rate: These are almost infallible systems that will have ongoing support for years to come.
  • Proven business model: A strict, proven model takes all the guesswork out of the business for you.

    startups
    Photo Courtesy of Starbucks® Coffee Company

Franchise Cons

  • Limited freedom: There is little to no room to deviate from the operations of a franchise. Remember, you are representing a brand, and you have to play by the rules.
  • Corporate scandal: Sometimes large corporations will make some not-so-favorable PR moves that can negatively affect your business. Ultimately, their behavior is out of your hands.
  • Expensive franchise dues: There is a fee for buying a franchise location and ongoing dues that you need to pay as a franchisee. These fees aren’t going away any time soon, and they can be pretty lofty expenses.

Decide Which One is Right for You

Franchise: If you like working within set guidelines, and you’re looking to profit from the word ‘go’, then a franchise might be the way forward for you. You might not be interested in inventing something new, and a proven model is a good option for financial stability while still maintaining your independence as a business owner.

Startup: If you crave the freedom to do things your own way, then a startup is for you. You’re not interested in answering to anyone but yourself, and you have an abundance of great, innovative ideas. Startups give you the freedom and flexibility to walk your own trail.

References:

https://www.entrepreneur.com/article/285035

https://www.entrepreneur.com/article/251728

https://www.investopedia.com/articles/personal-finance/110215/franchise-vs-startup-which-way-go.asp

Anna Delvillar
Anna Delvillar
Anna Delvillar is the editorial coordinator and a staff writer at ASBN. She graduated with a B.A. in English Composition from Georgia State University and has five years of experience developing content strategy and writing for automotive, tech, and small business media.

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