Small business owners that are financially successful are vital to our country’s economic success. There’s no denying that. According to the latest report by the U.S. Small Business Administration, about half of the United States GDP is attributed to small businesses.
Once an entrepreneur decides to start their own business, however, they are faced with a crucial decision: to franchise, or not to franchise?
The two are very different, so let’s breakdown how each works.
How are Franchising and Independent Ownership Different?
Ownership
- Independent Ownership: Owners call all the shots, and do all the set up themselves. From research to development, startups are a lot of work and can easily drain resources from other aspects of the business. If you’re a business owner already, or have owned one in the past, you know the workload and will be prepared to handle it. Someone without that experience, however, may have more trouble getting themselves off the ground.
- Franchising: When someone opens a franchise, they inherit a tried and true existing business model, saving time, energy, and money. This pre-packaged business set up, and franchisor support, makes launching the business an easy task. This means relinquishing your right to the final call on every individual business decision. You, of course, have a say on employee hiring, benefits packages, etc., but other decisions may fall into the hands of the franchisor.
Investment
- Independent Ownership: Independent Ownership is extremely time consuming, hands-on work. Because of this, it tends to be a much bigger investment overall. You do, however, choose how much you put in, both financially and effort-wise. No predetermined financial expectations here, and all the profits come back to you.
- Franchising: Franchising is lower total investment. Franchisors help franchisees kickstart their efforts so it’s not solely up to the owner. They assist with things like real estate, site selection, vendor discounts, and marketing. This comes with the understanding that the franchisee owes a cut of the profits to the franchisor.
Marketing and Branding
- Independent Ownership: Independent ownership allows for more freedom, but by requiring a heftier workload. Without proper guidance and research, marketing and branding investments can end in failure. If you have experience with these areas, there’s nothing to fear. If you don’t, it may be wise to seek outside help.
- Franchising: Franchisees may receive a predetermined branding and marketing “kit”. This way, they don’t have to start from scratch, but they must adhere to branding standards. This means sacrificing some creative freedom. Additionally, being a part of a franchise means you already have the brand name recognition, and therefore the ongoing national campaign support.
Operational Assets
- Independent Ownership: Independent owners can creatively manage every aspect of their business. They have the final say in practically every decision made, from day-to-day operations to hiring and management. With the final call on every decision, though, comes the risk that the outcome may not always be successful.
- Franchising: For those who would rather leverage a successful existing system, franchises are a better option. Franchisors have a stake in the success of every franchise, so they offer corporate support, but franchise owners still have control over their studio’s day-to-day operations.
The Bottom Line
If you’re looking for the freedom of owning a small business with the structure and support of an established brand, franchising may be right for you. And if franchising is right for you and you’ve got a passion for healthy living, Fitness Together® is the perfect fit.
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