The decision to open your own business or open a franchise for a large chain business will need to thought through carefully before investing any cash. There are advantages and disadvantages to both, and you can start with a simple advantages and disadvantages list to determine which business model will work the best according to your personality.

When you own your own business you will have to develop all the systems to meet your individual requirements. Payroll, supply ordering, invoicing, data collection as well as all personnel policies and procedures. With a franchise, all of these systems are usually included in the price of the franchise fee. A complete training program is usually provided to teach the owner and other principals how all of the systems work, enabling many people to start off the right foot.

With a franchise, while you own the business, it is going to be run according to established company guidelines. While there may be some room for deviation, many franchises require the owner to use only approved products. Established business practices and products to be sold are mandated to protect the integrity of the brand. Deviation from the menu or product selection is often grounds for hefty fines or cancellation of the franchise agreement.

When you own your own business, all the decisions you make are your own. If you decide a particular item in the product mix is not working for your specific location you have the individual autonomy to make a change. With a franchise it may take an act of Congress to get a change put through. There have been many stories about a franchise owner introducing a new menu item that the customers wanted and are thrilled to have on the menu. The main company, however were not pleased and ended the franchise, leaving the owner out in the cold for failing to follow direction.

With a franchise, part of the monthly fee goes towards national advertising. Although in most cases the individual franchise owner has the right to refuse to participate in a particular campaign, but with the advertisements running nationally, one outlet that does not offer the same deals can antagonise some customers resulting in a loss of business. Additionally, there may be some company policies that you do not agree with that you will need to follow to remain in the franchise. Before investing in a franchise, you will need to fully understand your obligations to the company as well as what the expectations are. Failing to be able to agree with everything about operating the franchise, it will be better to find another way to open a business.

Although owning your own business gives you the autonomy to make all the business decisions on you own, it will require you to pay attention to trends as well as what your competition is doing to keep your business in front and to increase market share. According to statistics, individuals starting their own business have a lower success rate compared to individuals running a franchise. One of the main advantages of franchises is the successful business model they offer, whereas, starting your own business, you will have to begin everything from scratch, testing your own ideas as you go along.

Franchises also require you to pay for the franchise license which can be very costly, especially with some of the better known franchises. Take McDonald’s, for example. When I was a teenager, my parents explored the possibility of buying a McDonald’s franchise. Back then, it cost AUD $1 million. In this current age, it is likely to cost a lot more. If you were to start your own burger joint, I’m sure it would not cost you AUD $1 million to get everything set up.

As you can see, there are pros and cons for starting your own business as opposed to buying a franchise, and only you will know which business direction will be right for you.