So you finally found the inner calling to start your own business. However, you are unable to decide whether a franchise or startup suits you. Fret not, the confusion is common. A franchise business gives you a readymade source of handsome income minus the initial groundwork, whereas you can implement experimental ideas and fully own a business if you choose a startup. A franchise business or a startup, both have their share of pros and cons. Assessing the options will enable you to understand the one meant for you.
Pros of Franchise
Franchise businesses possess the scope to purchase an existing and successfully tested business model and services/products. Franchising allows you to receive expert assistance regarding technical support, supply chain, and training programs. The rate of franchise success is 85% and this is significantly high. Even if a failure occurs, the number is in single low digits.
Franchising gives you a turnkey business, readily available for you to take the charge and run the venture. Are you efficient in following given decisions and systems, and meticulous? If yes, franchising is ideal for you to become a business owner without the drill.
Franchising varies from business to business. You can get the option to start from the base at a certain location or purchase an entire operational location. The second option allows you to jump right into the business with registered cash flow, existing customers, and a functional workforce.
Along with ready entry, you also have an easy exit path. The business is not your entire responsibility. Hence, you can sell it to another would-be franchisee as you retire. Are you thinking of starting a business that gives good profit with fewer risks or managing an actively operational business from the first day? If you agree to any of the questions, then franchising is an appropriate option for you. Tea Time, India’s fastest-growing tea provides tea franchise business across India. The company strives to make business accessible and affordable for all. If you are thinking of starting a business with less hassle and assured profit, then the tea franchise business might be for you.
Cons of Franchise
The franchise has its challenges too. Investing in franchises can be costly and burn a hole in your pocket. Ongoing expenditures reduce your in-home pay. You have to pay fees like royalty, GST, tax, and price for remodeling the target business area which cuts the profits.
The franchise failure rate is 20-10%, but the statistics might not always be correct. Moreover, every franchise business is not the same so evaluate the norms and restrictions before taking the decision.
One thing you have to understand making a franchise investment is, franchising implies purchasing a business blueprint. It would work only if you follow the blueprint formula. Your business is likely susceptible to the brand image of the franchisor company. Incidents of corruption, scandals, and mishaps can negatively affect your business as it would be linked to the brand name. Chick-fil-A franchises suffered due to a CEO’s comments regarding same-sex marriage. Franchisees might run and manage the business, but the franchisor still holds the main authority.
Pros of the Startup
If you have an idea and are confident about its prospects then a startup is your kind of business venture. A startup gives you the creative freedom and authority to implement your ideas to run and thrive in a business. John Schnatter of Papa John and Richard Branson, the founder of Virgin Group, and Facebook’s Mark Zuckerberg, all started with an idea. Falguni Nayar of Nykaa, Aman Gupta of Boat, Dhaval Shah, and Dharmil Sheth of PharmEasy show how innovative ideas can lead and turn successful startups into brands.
You can start your business anywhere- the base can be the back of your garage, room, or a car’s backseat. If you have the zeal and passion to hustle, then begin with the startup idea. The startup is inexpensive compared to franchise investment. If your ambition is more than receiving a stable paycheck then a startup is meant for you. You get to your boss because a startup implies sole ownership (unless you want to involve a second person. You get to decide what and how to run the business without others’ interference and this is the best part of self-employment. You work at your convenience and make decisions. You decide to provide new solutions/services or create a better or more efficient mousetrap that refers to a better service of a product that already exists. The startup is the ideal scope for you to show your ideas and prove your worth. Along with the sole authority, you will enjoy the entire profit.
Cons of Startup
The startup is tempting for all valid reasons. However, like everything else, it does not come without certain disadvantages. A startup means you decide everything on your own, without anybody’s assistance. No guidance or training is present, every process is a trial-and-error method. While one strategy might succeed, the other might fail or yield an unsatisfactory outcome. You have to possess determination and tenacity to continue hard work. In a startup, there will be days of long work hours with zero support. Research and planning strategies to execution, you will be responsible for all. The risk of failure is always present.
Many entrepreneurs tend to face loss and give up. 90% of startups tend to fail within the first five years. In India, the rate of startup failure is 90%. 10% fail in the initial year, and 70% fail within five to 7 years of inception.
The majority of people choose franchise businesses because the venture path is easier with minimum hassle. Tea Time understands the entrepreneurial dream and hence offers tea franchise business in a way that appeals to people. The company provides essential resources and takes minimal royalty. Unlike many companies, Tea Time allows and encourages franchisees to do business and grow further by becoming master and principal franchisees, managing business districts and state wise respectively. However, someone with big dreams and ambitions, unafraid to work hard for a long time, can go for a startup, which provides better financial and personal freedom.