Owning your own business is part of the American Dream. For decades now, choosing a franchise business has been just as likely an option for Americans who want to work for themselves as starting an independent business. The last census reported that over 10% of all businesses in the U.S. are now franchise businesses, and franchise opportunities exist in virtually every sector. For people considering going into business, the first question might be, “To franchise or not to franchise?”
So why do people choose a franchise rather than an independent business?
A study by a business research company looked at just that question. More than half of the respondents had never considered opening an independent business. They started their decision-making process either with a specific franchise in mind, or with the intention of choosing a franchise business.
For those who made the decision between a franchise and their own from-the-ground-up business, there were a number of reasons that led them to that decision:
- Name recognition, or the opportunity to start with a recognized company instead of building up recognition, was the main reason given. It’s hard to argue with this one — being able to go into your business with a ready-made market of people who know and want your product is a huge advantage. Often, national name recognition can come at a hefty price. If the most famous franchises are out of your price range, don’t forget to consider the advantage of being able to say that your company has been in business for decades or has 100 offices. A smaller, newer franchisee still has more recognition than a brand new business.
- Support and training was almost as popular an answer. Many franchisors say something like, “You own your business, but you’re not on your own.” It’s clear that having support from the franchisor is a real advantage for franchisees. However, each franchisor offers different kinds and different levels of support. If this is a primary motivator for you, make sure that the kind of training and support being offered is what you need.
- The ease of running a franchise, with proven systems in place and everything laid out before you begin, appealed to many of the entrepreneurs in the survey. While a franchise always has the advantage of being a known quantity, some have more flexibility and others have more systems in place. If this is important to you, ask about the ease of operation. Check the operating manuals and software systems being offered with the franchises you’re considering to make sure that the ease you’re looking for is in place.
- Lower risk of failure was neck-and-neck with operating ease for the people who answered the survey. While no business venture is completely without risk, franchise businesses have already proved their value. You know they can draw business, that they’re set up to be profitable, and that the systems will in fact work.
Interestingly, those who debated between investing in a franchise or starting their own independent business were more likely to research their options thoroughly than those who were sure they wanted a franchise business from the beginning. Both groups found that talking with current franchisees was their best source of information.
And both groups agreed that buying a franchise had been the right decision. A large majority of respondents would do it again.