If you are thinking about buying a business, then one of the many early decisions you will have to make is whether you should buy an independently owned small business or a franchise.

Both routes to business ownership can bring a buyer success, but it will be a matter of personal choice as to which path will be better suited for you.

Let’s take a look at the four major differences between an independent small business and a franchise to help you decide which camp will suit you best.

Branding

If you decide to go it alone and opt for an independently owned small business, you will most likely be going without the large-scale name recognition and branding that are associated with a large franchise. This can be detrimental in that a strong brand will automatically bring you customers loyal to the parent brand without having to try very hard. On the flip side of the branding coin, however, are the problems that can arise if the parent company or another franchisee makes a big negative splash in the media. Any of that bad press will automatically fall onto anyone within the franchise group.

If you are a marketing machine and love to create buzz about your business, then perhaps an independent business is for you. If you would rather focus your energy elsewhere and leave the branding to the parent company professionals, then a franchise would be a good choice.

Ownership

Yes, a franchisee owns their business in the same way that an independent owner does – the difference lies in the decision making abilities of these two owners. If you are part of a franchise then decisions on product choices, renovation decisions and operating procedures may be made for you.

If you are a first-time business buyer, this might be a good bet because you don’t have to make every decision right away. If you are a complete control freak by nature, you might have issues with having the parent company tell you what to do.

Total Cost

Although debatable and entirely dependent on each individual business and each individual franchise, there are a few generalizations about cost that you can use to help with your decision about becoming a franchisee.

In general, the upfront costs for buying a franchise can be a bit lower than buying an independently owned business, but in return the independent business owner has more control over their cash flow than a franchisee would. For instance, a franchise can require a renovation and you would have to comply where an independent owner can delay renovations until the cash is more readily available.

Operations

This one is also helpful for a first-time business buyer. If you opt for the franchise route, then the day-to-day operations of your business will be established and tested. You will not, however, be able to make major changes to the standard operating procedures if one or more parts don’t suit the way you like to run your business.

Buying an existing independent small business also means that you inherit a set of operating procedures – the difference is that these procedures are not so set in stone. As you learn the ins and outs of running your new business, you can make any changes you see as necessary.

If you are considering a franchise over an independent business or vice versa – the best thing to do is have a chat with a business broker experienced with both franchise and independently owned businesses. Using your experience and your goals for business ownership you and your broker will be able to sort out which option would be best for you. 

Are you considering a franchise and have more questions about what it would mean to be a franchisee? Do you think an independently owned small business would be better for you and want to know what businesses are currently available? Please feel free to leave any questions or comments and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com