PeopleIf you are considering starting a new business, like many others in your situation have faced before you, you have probably weighed the options of starting an individual business from scratch or opting for a franchise situation.  Comparing the two can be a daunting and confusing process, as both have pros and cons that can greatly affect your business and your financial stability in the years to come.  Investing in just about anything in an economy like we are facing today can be a scary process.  Fully considering your options and making the best choice for you is the best insurance you can have for your investment.

What type of risk taker are you?
You need to start the decision making process by taking into account your comfort zone as well as your goals.  With a start up, you have a higher risk of investment, as nearly fifty percent of all start up businesses fail in the first five years.  You will also find you will work harder to meet your goals, at least initially.  Without an established brand to back you up, you have to push yourself infront of your target customer and draw them into your doors.  While hard work and bigger risk may scare some people off, for the adventurous entrepreneur the payoff can be big.  Consider any major franchise out there today.  Each of those mega corporations started out as someone’s local, home-grown business.  If your dream is to own an empire, an individual business may be the best option for your investment capitol.

If you prefer to invest in a manner that is lower risk, franchising may be the better option for you.  Franchising provides a great opportunity to open a business without the requirement of building a brand.  The brand recognition, consumer loyalty and track record is there for you to see.  Franchises often have entire teams devoted to helping their franchisees succeed- from choosing the right real estate to walking you through supply orders, a franchisor is committed to helping you avoid mistakes. Franchisees reap the benefits of corporate advertising, as few individual businesses can hire design and marketing teams to promote their concept the way a major established corporation can. The downside to franchising is that you must run your business within the guidelines of the parent company, so despite having your own business, there is still the “boss” entity many wish to avoid.  There is tremendous opportunity for profit, but your ability to expand in your market may be limited by territory boundaries.

There is no “best” or “one size fits all” answer to the question of franchise versus independent business. In the end, both can be lucrative, both have risks, and both have their limitations.  Talking with other experienced entrepreneurs that have struck it alone as well as successful franchisees is the best place to start.  In the end, it is a personal choice as to which is right for you.