There are many potential paths to entrepreneurship. Depending on who you are and how you work, some options are going to be more suitable than others. Looking at two of the most common routes – investing in a franchise or launching your own startup – there are some key differences to consider.  

In this article, we explore those factors.  

Both options have their pros and cons. 

There is no magical option that guarantees a 100% chance of success with no hard work on your end. However, both franchise systems and startup businesses have advantages and disadvantages. Before choosing in either direction, it’s important to evaluate those pros and cons.  

The advantages of a franchise business are: 

• A system to follow. 
• Depending on the franchisor/brand, many franchise opportunities have a higher success rate than independent alternatives because there is a predetermined methodology including brand value, unique operations, and day-to-day support. 
• Continual support from the franchisor/parent company, including training, operational, and marketing resources. 
• Other franchisees to provide continual feedback including pitfalls and best practices. 
• Depending on the size and reach of the brand, some franchises enjoy collective buying power and market clout.  

Disadvantages include: 

• Less freedom when it comes to branding, services, etc.  
• Potential territory limitations.  
• Reliance on the franchisor to create new market opportunities.  

In contrast, the advantages of a startup include: 

• Creative, operational, and territorial freedom.  
• No upfront lump fee.  
• No recurring royalties or other fees to a franchisor.  

While the disadvantages are: 

• Lack of collective purchasing power and marketplace clout. 
• Overwhelming launch process, with a lack of training and support.  
• Lack of a proven success model.  
• No brand recognition.  
• Need to create all documents, agreements, checklists, emails, letters, templates, etc. 
• May be alone on an island.
  

It’s important to self-reflect. 

Not everyone is cut out for a startup. Likewise, not everyone is cut out to work with a franchise company. It’s crucial to determine which model suits your personality and working style better.  

Likewise, determining your motivations for going into business is critical. Oftentimes, the desire for agency over your schedule and other lifestyle decisions can be achieved with less ramp up stress with a franchise than with a startup. However, if the goal is innovation and doing things completely your own way, a startup’s particular challenges may be necessary to achieve those goals.  

Reflect outside yourself as well.  

You are not the only variable to your success. Take a look at the economy around you, nationwide and in your immediate area. How are startups doing in this climate? What about businesses in the industry you’re looking at? What about competition and/or competitive barriers? These factors should inform your choice as much as your own personal traits.  

In conclusion… 

Neither a startup nor a franchise business guarantees automatic success if the person investing in them doesn’t make the right decision for themselves and their circumstances, and then commit to the desired outcome.