Owning your own business is hard work and it isn’t always a guaranteed success. Sometimes a business is a passion project, selling a good or service that you’ve cared about for a long time. In that case, you may want to consider a sole proprietorship. You’ll have complete control over the business from the ground up. On the other hand, if you’re willing to compromise starting a franchise has some definite benefits over an independent start-up. Let’s look at some of the benefits of buying into a franchise.
About half of all sole proprietorships will close within the first year of business and only about a third will make it to their ten-year anniversary according to the US Small Business Administration. When you consider that most business owners invest their life savings in a start-up, those numbers are sobering. The fact is that averaged out across businesses, franchises fail at about the same rate, but the success rate is tied directly to the type of franchise you purchase. Some franchises fail up to 90% of the time, and others almost never will. It’s imperative to do your research, but if you do, you can get in on a business that has a much lower rate of failure than the rest of the market.
A lot of franchises are turnkey operations, meaning you walk in, turn on the lights and start the business. Many large franchises, like McDonald’s, already have the building in place built to their specifications. You are saved all the planning on the front end, and once the business is open, you’ll save even more time. Franchisees benefit from the marketing that the parent company does. You won’t have to worry about time and budgeting for advertising.
Franchises come at different price points and part of that is buying into the blue sky of a company. Again using McDonald’s as an example, a franchisee is buying the name recognition and nearly guaranteed business that comes along with opening a McDonald’s. It may cost more initially, but there are almost no worries that the location won’t be profitable.
Of course, there are always disadvantages to any setup. There are far more rules that you aren’t in charge of, and you do have to pay the parent company part of your profits. However, if you’re willing to do the research to find the perfect franchise for you, your chances of success are far greater than in much of the small business world.