To Invest in a Franchise or Start Your Own Business, That Is The Question.

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invest in franchise or start a business

If you’re thinking about becoming your own boss, you will need to decide whether to invest in a franchise or start your own business. Read on to help you make the right choice…


Fear, anticipation, excitement. These are just some of the feelings many entrepreneurs have experienced when they’ve considered being a business owner. After all, it is a huge career step that will impact your professional, as well as your personal, life for a long time. Let’s imagine you’ve already chosen what type of business you want to start, the next decision you’ll have to make may prove a little more difficult. Do you invest in a franchise or do you start your own business from scratch?

The answer will be different for everyone. Both choices have their pros and cons, and only you can decide which path is right for you. While there is no right or wrong answer, there are some critical differences between the franchise model and an independent business that you should be aware of. We explore these in more detail below.

1. Security vs creativity

Franchise approach

With the franchise model, franchisees don't have as much control as an independent business owner. The franchisor decides vital elements of the business such as the products sold, and the services offered. There are many rules to follow to protect the consistency of the brand which, in turn, results in profitable franchises.

However, with the strict rules and obligations that come with being a franchisee, you also get security. When you invest in a proven business model, you know that all elements of the franchise have been tried and tested, both by the franchisor and other franchisees. You get to benefit from the time, effort and money that the franchisor has invested into developing and perfecting the franchise and therefore don’t have to make the same mistakes along the way.

Start from scratch approach

If you find it difficult to adhere to the rules, then a franchise business may not be right for you. By taking the independent start-up route, you don’t have to sacrifice your creativity. But at the same time, you won’t be able to enjoy the security and stability of being part of a well-established business.


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2. Ongoing costs vs upfront costs

Franchise approach

The costs associated with starting any business can be significant, but the difference between franchise brands and a business you start from scratch is the timing of the costs. Franchise businesses tend to have lower upfront investment costs. In return for a relatively modest franchise fee, franchisees have most things in place ready for them to launch their new business.

However, unlike an independent business, franchisees also have to pay ongoing fees to the franchisor. These can include royalty and marketing fees which are generally calculated as a percentage of gross sales. The obligation to pay these fees is on top of regular ongoing business expenses such as the rental of premises or the lease of a vehicle.

Start from scratch approach

When you're setting up an independent business, you're likely to need to invest quite heavily while you're establishing your new venture. The cost of purchasing stock, equipment, vehicles, premises as well as developing the infrastructure of your business results in a significant financial outlay before you can even start trading.

3. Impacted by the brand reputation vs complete freedom

Franchise approach

In most cases, franchisees have an advantage over independent business owners when they choose to invest in recognisable franchise brands. It can take years of effort and expense to build up a brand reputation, yet franchisees immediately benefit from the hard work of the franchisor with a well-known name and a ready-made customer base.

Start from scratch approach

Independent business owners don’t have to be concerned about their reputation being tarnished by the actions of another business. As a franchisee, you rely on the franchisor and other franchisees within the network to protect the status of the brand. This reputation may become damaged through no fault of the franchisee, but their business may still suffer because of it.

4. Support vs independence

Franchise approach

The franchise model is perfect for first-time business owners. As well as benefiting from a proven business system, the training and support that's provided are ideal for budding entrepreneurs who are inexperienced in running a business. Franchisees are not only taught the operational know-how to operate profitable franchises, but also gain essential business ownership skills. These are invaluable to new franchisees who would otherwise have to learn on the job. So, if you're willing to learn to become successful, then the franchising route may be best suited to you.

Start from scratch approach

Many independent business owners would appreciate the training opportunities that a franchisee has, but they don’t have access to them. They do, however, retain total control over their new business. Therefore, if you have a fiercely independent spirit and you like to be in control, then you may thrive by choosing to go it alone.

5. Survival vs risk

Franchise approach

According to the British Franchise Association / NatWest 2018 Franchise Survey, failure rates for franchises is very low. In fact, less than one percent per year closed due to commercial failure. What’s more, 93 percent of franchises were profitable in 2018.


Start from scratch approach

Research performed by Ormsby Street found that even though 91 percent of small businesses survive their first year of trading, just 40 percent are still in business five years later. This isn’t to say that you can’t be successful from starting a business from scratch, but it does suggest that diving in headfirst without the support of experts does come with more risk.

Investing in a franchise – take the next step today

Buying a franchise is no guarantee of success but the ongoing support that’s provided certainly appears to contribute towards the longevity of franchisees. It should be remembered though, that whether you choose to invest in a franchise or set up a business in your own right, doing your homework is paramount to your success.

Make sure that you carefully research your chosen path before you take your first steps to business ownership. Browse our UK Franchise Directory for all of the latest opportunities in various sectors.

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