What Is the Difference Between an independent Small Business and a Franchise?
Updated: Aug 30, 2022
Owners of small businesses have greater control, but franchisees benefit from built-in processes and procedures and brand recognition.
Control is the main difference to consider when deciding whether to start a small business or buy a franchise. Franchise owners follow guidelines set in place by the franchisor, whereas small business owners determine when and how their business operates.
Franchises may be a bit confining for entrepreneurs who prefer to be in full control of their businesses. Despite that, franchise owners can find a reliable business model to guide them to success. A recent survey has found that independent businesses fare poorly compared to franchises.
The following are just a few of the more intricate differences between owning a franchise and a small business.
While small business owners can adjust their products and services when market conditions fluctuate, franchise owners cannot. The franchisor makes these decisions, and franchisees must follow them. The franchise owner can also be confident that the products and methods they're using have a track record for success in other areas.
Availability of Resources
In addition to the stability franchise methods provide, franchisees have access to a wide range of resources from their parent companies. While small business owners do not have specific business models to follow, franchise owners will find support from corporate and bulk purchasing power, along with a team of professionals who know what they're doing.
Recognition of brands
You must wait a while for a new brand to gain traction. There is no built-in customer base for small businesses that lack an established brand. Franchises have this advantage, except when negative publicity affects all franchises.
Operational and start-up costs
Franchisees can skip the start-up phase, and their up-front investment is lower than that of a small business owner. Franchisees are generally not in control of how and when a franchise is launched, so they have no say when the franchise opens. The franchisor will also collect regular royalties from franchise owners.
Franchise businesses have proven successful because of their recognizability, support, and reliability. Anyone interested in buying a franchise can find plenty of information through the U.S. Small Business Administration. Potential franchise owners can calculate the costs and figure out how much they'd need to invest in creating their own business.