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WHAT ARE YOUR OPTIONS WHEN YOU BEGIN YOUR BUSINESS?

Once you make the decision to start your own business, you need to decide whether you want to be an independent business owner or a franchisee.

STARTING A NEW BUSINESS:

ADVANTAGES DISADVANTAGES
  • usually lower start-up cost
  • independence and creative freedom
  • no inherited problems from an existing business

 
  • requires more time and energy
  • higher risk of failure
  • takes longer to become profitable
  • financing may be more difficult to obtain

 

BUYING A NEW FRANCHISE:

ADVANTAGES DISADVANTAGES
  • reduced risk of failure over an independent business
  • proven methods and products
  • start-up assistance
  • on-going training and support
  • local, regional, and national advertising
  • collective purchasing power
  • research and development
  • association and synergy with other franchisees
  • easier to obtain financing

 
  • costs more (fees, royalties, supplies)
  • smaller profit margins
  • lack of independence and freedom
  • difficult to achieve redress if franchisor fails to meet obligations
  • a franchisor's problem may become your problem

 

 

 

 

 

BUYING AN EXISTING FRANCHISE:

ADVANTAGES DISADVANTAGES
  • the business is already up and running
  • risk and uncertainty are reduced
  • the basic infrastructure is in place:
    • established location
    • existing customers and reputation
    • employees
    • vendors
    • policies and procedures
    • cash flow
    • no start-up period-quicker profitability
    • easier to obtain financing
  • tangible limitations:
    • design problems
    • location problems
    • merchandise problems
  • intangible limitations:
    • customer or employee ill will
    • pricing problems
    • inadequate procedures
    • lease problems
  • pontentially higher costs to buy
  • legal liability in inheriting lawsuits