Franchising vs Owner-Operator Business… what’s right for you?
The business runway has a number of options. Do you take the Cessna and fly solo, or the Jumbo with a full franchising team on board? Here, we look at the pros and cons of these two very different business models and how they stack up.
Do you have a great business idea which fills a niche? What funds do you have to start a new venture? Are you comfortable heading into unchartered waters or does an existing business model appeal? Do you want to build a name from scratch, or leverage the benefits of a well-known brand?
Starting a business can be a long-planned decision, and for others it can happen suddenly. Many mums, or ‘mumtrepreneurs’, stumble upon a niche while at home with the kids and launch their own business to remain at home while earning an income. The flexibility to start small and grow the business at their own pace has great appeal.
For others, their venture is a long time in the planning. Many franchised operators, for example, have an intimate knowledge of their industry, the products and what customers want, and they have a vision for how to shape and market the business. At Bedshed, we have many franchise owners who have long-held an ambition to run their own successful specialist bedding retailer.
Deciding whether to fly solo or buy into an existing brand is very much a personal decision and largely depends on your needs, knowledge and comfort level. Regardless, it’s important to choose an industry that reflects your motivation and passion. The long hours and endless challenges will be better handled with an unwavering dedication to your craft.
The pros and cons
Franchising offers many benefits, including access to a well-known brand, bulk purchasing power, group marketing support and practical advice from a knowledgeable management team. Because of this, it doesn’t carry the same risks as solo start-ups.
Discussing business challenges or issues with their franchisor or fellow franchisees is an option not available to solo operators. Franchised owners enjoy all the benefits of big business, but with the flexibility that comes from running their own show. It’s the ideal combination of autonomy and centralised, practical support.
The training provided by franchisors shouldn’t be underestimated either. Comprehensive ongoing training is available to owners and their staff across all areas of the business – manufacturing, accounting, merchandising and marketing for example.
Solo operators, on the other hand, need to master each individual business component themselves. It helps if family or friends have skills to contribute, particularly in the early days.
The flipside to doing it all is the complete freedom to take your business in any direction. The control to shape, grow and diversify their own business in their own way often suits the entrepreneurial spirit of many solo operators.
Unlike some franchised businesses, solo players are not bound by specific catchment areas, giving them the flexibility to market their products far and wide, particularly if they enter the online space.
The small business lifestyle
Many start a small business for the lifestyle benefits, only to discover that regular games of golf and frequent overseas holidays don’t eventuate. Long hours take hold as your passion and vision for the business grows.
Franchisees and owner-operator businesses backed by a strong (and small) team will find it easier to achieve greater control over their work schedule – they have more flexibility to pick up the kids from school and can make time to watch them play footy on the weekend.
A team of reliable, skilled and trusted staff will also make it easier for business owners to escape for some R&R. It’s just one of the reasons why finding good people is good for your business.
There’s a long-held misconception that buying a franchise requires loads of cash. That’s true of some, but not of others with franchised businesses available from as little as $5,000 for upfront fees and set-up. Sometimes the capital investment can be less than starting a venture from scratch.
Typically, franchisees also contribute either a fixed monthly fee or percentage of turnover for franchise support and group marketing costs. What you’re paying for is the business infrastructure, where you’re on your feet and ready to go.
Starting a solo business can be financially manageable for those who don’t need a big outlay or a business loan. Yet the reality is that many business owners – solo and franchise – do meet with the bank manager to fund their venture.
The reward’s in the effort
Some people have the illusion that starting a business is a license to print money, only to discover they end up working triple the hours they did working for someone else.
Whatever path you take, hard work is the essential ingredient to making money. Approach your business as a very active and involved business owner, and put in the effort to reap the reward.
-By Gavin Culmsee, Chief Operating Officer, Bedshed. With over 20 years of experience in retailing at all levels, Culmsee is extremely knowledgeable about the franchising and retail business landscape. Currently the Chief Operating Officer at expanding specialist bedding franchise, Bedshed, Gavin previously worked in senior management roles at Freedom Furniture for over ten years. Gavin is passionate about business, whether it be a franchise or a standalone and frequently offers advice and guidance to Bedshed’s own franchisees.