These days, everybody wants to start a business, everyone wants to dream big and fulfill them. Usually, they have 2 options, adopt a franchise or establish a startup. Both have their pros and cons. As the title suggests, franchise gives you security or success as it is an already established business & startups lets you have the freedom to plan strategy etc. to grow your business. In the blog we will discuss both the business types.
FRANCHISE
Franchise is a business-model in which you start a business by adopting the brand name, working methods & identity of an already established organization. One has to adopt the rules & methods of the organization so that customers get some experience in every outlet. That means, you work on your own business but with an established name & system, which increases the chances of success.
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BENEFITS OF A FRANCHISE
The franchise model has many benefits that make it a safe option.
- You get an already established brand which is known & trusted by people. This makes initial sales easy.
- Franchise is an already planned & executed business. The franchiser gives you SOP, training manuals & supply chains, due to which you don’t have to do the research & planning.
- The Company also supports you in local & national marketing, which means one doesn’t have to invest in promotions.
- According to a study, the status of success in franchises is much more than those of start-ups , which makes it reliable for new business owners.
CHALLENGES IN FRANCHISE
Getting a franchise is beneficial best it also has many disadvantages as well.
- Franchise requires a hefty initial investment. This is because the company charges you a fee, to give you the franchise. This could vary from 5 lacs to 50 lacs.
- The owner does not get full profit as he has to give 3% to 10% royalty fees to the brands.
- This model doesn’t give you freedom to make decisions. You ain’t even allowed to launch a new product or service according to your wish.
- Location isn’t decided by you. The company decides where you can open the franchise & most areas don’t get permitted.
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STARTUP
Startup means establishing a business which is based on a new and innovative idea. In this, you launch a new product or service, or solve a problem. You also present it in a way which is different and attractive. In a startup you have to figure out the brand name, product design, marketing strategy and operation model. This model’s success is totally based on your imagination, homework & decisions & hence is risky.
BENEFITS OF STARTUP
A startup has many benefits which makes it attractive for creative & innovative people.
- The business model gives you the freedom to choose the idea, design the logo, decide the product, and make strategies for business & marketing.
- Financial decisions are in your hands. You don’t have to give someone royalty. You can decide the price & keep the profits.
- If your business works & grows, you can make your own brand value & start forming a franchise.
- In startup business, one has to learn about finance, marketing, management & team building etc,. which not help today but are beneficial for the future
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DISADVANTAGES OF STARTUPS
Building a startup is advantageous but also risky. It has many disadvantages
- startups are prone to failures as there is lack of funds, knowledge of the market & a strong team.
- Marketing needs a hefty investment as nobody knows the company in the beginning.
- Getting guidance is very important but equally tough. One has to manage operations, marketing and technical difficulties themselves.
- The investment risk is only faced by you. If the business fails, the money ,time and efforts are wasted and that too only out of your pocket.
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CONCLUSION
Franchise & startups are both roads to success. It depends on you, whether you want risk or freedom. It also depends on your experience & funding. If you don’t take risks & are fine with working on an already built system, then franchise is the best option for you. Choose a startup if you want to do something different , build your own identity & not fear challenges.
If you’re also struggling with low sales in your business, this article can be extremely helpful for you. Moreover, if you’re facing any kind of challenge in your business and are looking for expert guidance, click on the link to the Leadership Funnel Program and get in touch with us now.