When you decide to be your own boss you’re faced with many emotions. There’s a certain excitement that comes with running a successful business, making the important decisions, establishing your hours, and working on your own terms …

But then there is this anxiety as well in not knowing if you will succeed. The chance that your business could fold and you could find yourself without a job and in a heap of financial debt can be unnerving.

Of course with any business venture, there’s always a risk factor. Depending on your comfort level, there are options to take some of the pressure off so you can focus more on launching and marketing your company and less on the logistics of starting from scratch.

Here lies one of the greatest differentiators between Franchising and a new independent business. One type of business can give you facts, figures, and success rates and the other can have several unknown variables leaving you to do all of the footwork.

Martha Lawrence is the Franchise Development Director for Lice Squad.com – the leading head lice franchise business in Canada. Says Martha, “when deciding to become a business owner, one of the initial decisions Entrepreneurs make is whether to buy a franchise or strike out on their own.”

Here, Martha discusses the difference between franchising vs. non-franchising and shares her expertise.

Franchising vs. Non-Franchising

Brand Awareness

In all business there are two types of owners – the owners who want an out of the box business and others who desire to create and invent their own. When you buy a franchise, you’re buying into a brand that already has presence and traction with its target markets. When you do it all yourself, it’s up to you to establish your brand, create and build your marketing system and your audience.

Decision Making and Control

When you own a Franchise, you are an independent owner making decisions for your business by applying the franchise model you bought into. Franchises succeed because they are backed by research, a proven sales system, and establishment in the market. They have every right to call some of the shots because any action on your part doesn’t just put your business at risk – but the franchise as a whole. If you don’t like following policies and procedures set out by others, would like to have full creative control with the chance to reinvent the wheel and make every decision for your business … franchising is not for you.

Equipment and Supplies

It’s true what they say, there’s strength in numbers. When it comes to franchising, there is more influence and buying power among the suppliers and trades. Essentially, the franchise has done the work for you so you can have confidence in getting preferred pricing without compromising the quality. As an independent owner, you have to price shop and research to find the best price and quality of supplies, equipment, and contractors. You have very little bargaining power because it’s just one company as opposed to many.

Legal Disclosure

Franchises must disclose information to you about their business in documents that are provincially regulated. If you’re buying an existing business from an individual, you have no idea if they can be trusted. It’s a true leap of faith because if your seller goes missing in action, you have next to no options for justice. With a franchise, you have a fighting chance as they are active and present in the market.

Financing

There is a clear difference between the financing that’s involved with franchising vs. an independent business. You can start a company on limited income but if you buy a franchise there’s no way around the initial costs.

Marketing

When it comes to marketing, you are a one man or woman show. It’s up to you to decide on your Marketing Plan and take action upon it. With franchising, you have the power of the brand’s reputation in the market that took time and a large advertising budget to establish.
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Time is Money

The turnaround time to launching a Franchise vs. launching your own independent company is very different. With a franchise, you have an out of the box feel. Things move relatively quickly from the time you sign the paperwork to the day you open your doors. As an independent, you are reinventing the wheel which can be time consuming, exhausting and drag out much longer than you expected.

Faster ROI

The return on investment can take a lot longer when you’re an independent business vs a franchise business. When you’re a franchise people are already looking for you. Essentially, you generate revenues the moment you open your doors. When you’re independent, you have to work at developing awareness. You don’t necessarily attract customers right away. You’re in the acquisition stage of your business launch. You will have to pay to obtain leads before you make the sales.

Training and Support

With a franchise, you will receive training and support. Every franchise is different but with Lice Squad.com as an example, our franchisees receive comprehensive initial training from marketing to administration to customer service and compliance. We have a head office team to support our franchisees not only through their launch phase but throughout the duration of owning a Lice Squad.com franchise. Individuals have to establish their own training manuals and compliances with no support after the launch. As a Franchisee you also have the support of all the other Franchisees from new start-ups to veterans in the business. As an independent, you have to seek out your own support network.

Product and/or Service Innovation

Trying to establish a new product or service into the market is a lot of work and investment. If the product or service is a bust, you’re out money and time. Franchisors are always developing new products and assessing any changes they need to make to the service protocol. They are backed by historical data and performance of the franchises as a system taking their input into consideration as well. This helps them decide on future marketing initiatives, any new alliances with suppliers, distributors and more. If a new product isn’t doing well, they have the foresight to stop the initiatives and cut their losses early on.

Site Selection

When it comes to location, franchises have done the research for you. They have ongoing relationships with site selection experts, real estate agents plus years of experience in finding the best sites for the brand. They can help with landlord lease negotiations and more. When you’re an independent business, it’s entirely up to you to find the best site for your business, work with the real estate agents and deal with the landlords.

Culture/Fit

When you’re independent, you only have yourself to think about but when you’re a franchise, there is constant communication between yourself and head office. You need one another to succeed so the relationship is often compared to being like a marriage. It’s important that the company culture, morals, and values align with yours or the relationship could be a disaster.

Exit Strategy and Resale Value

Should you decide to exit the company and sell, you have a more promising strategy owning a franchise than being independent. Your franchise brand has more buying power. If you have a hard time selling, there’s a chance the franchise could buy your store and run it themselves until they find a buyer. As an independent, you often have to cut your losses and sell at a bargain basement price.

We hope this article has given you some food for thought. It’s an important business decision with very different business models. Either way, being an entrepreneur can be a rewarding and fulfilling experience whether you’re the go getting self-starter or smart investor who sees value in running franchises with proven success.

About the Author

As the Director of Franchise Development for Lice Squad Canada Inc., Martha is responsible for managing the development program for the Lice Squad.com franchise model including, recruiting, training and supporting franchisees across Canada. Involved in franchising since 1993, Martha started at First Choice Haircutters as assistant to the General Counsel and Vice President Development. She became National Director of Franchise Development for Regis Corporation and was Director of Operations and Marketing for Premier Homecare Services. Martha has been an active volunteer with the Canadian Franchise Association for over 15 years serving on the convention and membership committees. Martha is driven to coach franchisees to operate effectively, grow brand awareness and reach and exceed revenue targets.