Before starting the research process on how profitable it is to choose an independent business or a partnership with a franchise network, we will need to face one of the most basic dilemmas we must address. We will have to decide whether to create our own business.
A new business undoubtedly changes our lives. We leave behind any professional and financial security and enter the battlefield. Where we are constantly evaluated by our choices, our financial and mental reserves, our competition, our partners, our family, and our customers. And most importantly, an environment that is constantly changing.
We should therefore think carefully before making the big decision. Conditions, competition, consumer preferences, investment costs, and the overall operation of the business should be investigated. A good method to follow is when you’re done with your calculations, increase (arbitrarily) expenses by 30% and decrease expected revenue by 50%. In case the numbers still look appealing, then you are ready for the next step. This means you are ready to set up a stand-alone business or join a franchise network.
The help our company offers you in this dilemma is to encourage you to do what suits you. This sounds obvious, but our experience has shown us that young entrepreneurs make spontaneous decisions, without first studying and without knowing the importance of their choices. So start with us to help you sort out the individual fields to see what is most suited to your habits.
In your own business, you are responsible for everything. You choose the color you want to paint the walls of the shop and the way you want to communicate with your customers. You have the power to change what you want and when you want. You can add new products and practice any commercial or pricing policy you wish (of course always within the legal framework).
The only rule for decision-making is that there is no rule! It sounds too good to be true but it is a fact. The only rule for decision-making is that there is no rule! It sounds too good to be true but it is a fact. We are free people and just as in life our actions are followed by good or painful consequences, the same is true in business. This means that your choices are those that will lead you to growth and profits or they will be those that will lead you to wither away by creating losses, losing customers and partners resulting in the fateful closure of your business.
Strength in unity.
This is exactly what happens in a healthy franchise network. Many independent businesses “come together” under one brand and communicate their ideas and concepts to consumers.
In a franchising partnership, there is only one rule. The franchisor (i.e. the parent company) sets all the rules and you have to follow them faithfully. It is your business but as far as the way of operation and communication is concerned you have no right to change anything. This is exactly the fundamental element of the franchise.
Consumers can easily identify a network store and therefore know in advance the services offered, products, and prices when they visit. It is also important to note that the franchise networks that fail and are in or out of business are those where the parent company does not set strict rules from the outset or does not consistently apply strict rules to its members.
Marketing
In a stand-alone business, you start from scratch. No one knows you and you will have to figure out how to communicate with your customers yourself. You have to get them to listen to you, see you, notice you, and finally choose you.
Of course, all the money you invest in communication is your money and usually not enough to be effective. If you choose to join a franchise network, you start from day one with a reputation already established by the chain. It’s as if the consumer is already waiting for you. Of course, you have to respect but also build on this existing and valuable reputation. Also, you should be aware that if you create a negative reputation for a member of the network or the franchise chain in general, then possibly your store unfairly suffers the consequences of the actions of others.
Products
The first question suppliers ask any interested partner, is about the quantities they can commit to buying.
Based on the principle of economies of scale, in franchising it is the parent company that has the power, by taking advantage of the large volume of markets, to create its own products or to obtain very good prices and special facilities in marketing and distribution. This offers a comparative advantage that serves the interests of all members of the network. Of course, we are referring to networks that operate based on healthy relationships and do not withhold all the benefits for themselves.
On the other hand, there is a lot of difficulty for independent entrepreneurs. Especially at the beginning, they often talk about low purchases and thus often fail to meet even the minimum orders that the supplier sets as a condition for cooperation.
Legal
Franchising is a demanding process of cooperation and the contract signed between the franchisor and the franchisee has quite strict conditions for the latter. The franchisee declares and accepts that he is a member of the franchise system and thus accepts all the rules set by the franchisor. He agrees to abide by all the terms and agrees in case of any breach to pay high amounts as penalties.
The self-employed entrepreneur, as mentioned above, decides for himself and does not contract with a third party. Of course, this does not mean that there are no legal consequences for his actions. He signs a lease, contracts with suppliers, and has legal obligations with public bodies. If he does not know or worse if he thinks he knows everything, he risks serious consequences which could jeopardize his business or even his future.
IN BRIEF
It all starts and ends with the passion, diligence, and skill of the entrepreneur. An entrepreneur with these characteristics is certainly more likely to succeed, either on his own or within a franchise network.
Nowadays it is increasingly difficult, especially in some sectors, to succeed by oneself. Franchise networks offer security and strong marketing, creating a sense of security for consumers.
The continuous training and support as well as the knowledge provided by the franchisor, allow the franchisee to operate his business with ease.
The self-employed entrepreneur has to work harder. He will have to organize himself constantly and operate like a multinational company. He needs to move away from the omniscient syndrome and work with qualified professionals who will support him, train him, and help him take the next step.
In conclusion, whatever you choose to do, you should be aware that consumers are demanding and competition is fierce and intense. Conditions are constantly changing and tend to be unpredictable. As you can see, the business sector is not for everyone. Therefore if you believe in yourself, take your business step with organization and seriousness and not with wishful thinking and wishful thinking.
We wish you good luck in whatever decision you make!
THE WAY’s expert team of consultants can support you in setting up your business. If you are running a franchise business, we can help you choose the right network and negotiate the terms of the partnership. If you want to set up an independent business, we can help you study your business plan and create your concept.
Contact us 210 9602952 or info@theway.gr or fill in the contact form HERE.