If you are thinking of entering the world of business ownership by buying an existing business, then one of the decisions you will have to make will concern the type of ownership.

There are essentially two options, you can buy into a franchise or purchase an independent business. How do you decide between the two? Think about the differences between the two types of ownership by asking yourself these questions:

What type of owner do you want to be?

If you are someone who wants complete and total control of absolutely everything in your business, then franchise ownership is likely not for you. Independent business owners get the freedom to make every decision, and also have the freedom to change things along the way as they decide what works and what doesn’t. If, on the other hand, you are someone who is ok with having some general guidelines in exchange for the branding power and tested business model that comes with a franchise, then this option might be your best bet.

What do you want to spend your money on?

When you buy a franchise there are upfront franchise fees and then there are typically also royalties that will need to be paid on a continual basis. If you own an independent business, you will not have these costs, but you will also have to spend a lot more time, energy and money developing your concept and marketing it to acquire new customers.

How new are you to business ownership?

If you have never owned a business before, then a franchise might be a great choice. With many franchises, you get an already developed concept complete with operating procedures, corporate suppliers, training help, etc. Sure, veteran business owners also buy franchises, but if you are brand new in the industry you may have a bit of a learning curve if you try to go it completely alone for your first venture.

Do you really want to be associated with a big brand?

There are many advantages to buying into a franchise with big brand power. Customers come directly to you, without much marketing effort on your part. On the other side of this coin, however, is the realization that the actions of every franchisee reflect on the rest of the brand. A scandal halfway across the country could affect your bottom line if you share a franchise name with that owner.

Are franchises more successful than independent businesses?

You can find a lot of evidence for both sides of this argument, but what is important to remember if you are considering buying a business is that all business ventures come with an inherent amount of risk. There is no way to avoid this risk, and both franchises and independent businesses alike go under everyday.

The decision as to which type of business to buy is one that will depend entirely on your goals, how much you are looking to spend, and the business life you would like to have. Look carefully at all of your options, and discuss your questions and concerns with your business broker before making your decision.

Are you thinking about buying a franchise, but you have questions about the pros and cons of such a purchase? Ask us! Leave a comment or question here, and we would be happy to answer all of your franchising questions.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com