In the entrepreneurial world, the debate between diving into a hospitality franchise versus starting a “company-owned business” remains evergreen. Each model offers distinct advantages and challenges, so what is the right choice for you?
Should you invest in a franchise business that already has a solid reputation and minimal risk, or should you venture into a company-owned business and have complete freedom over your future opportunities?
Both options have their merits and challenges. To ensure that you make the right choice, understanding the pros and cons of each option is critical. That’s why we’ve created this guide to the pros and cons of each, so that you can make a decision you are comfortable with.
To help make your decision, you can also check out our Franchise Checklist that has been designed to help you determine if you are ready to own a hospitality franchise.
What is the Difference Between a Franchise and a Company-Owned Business?
The primary distinction between a franchise and a company-owned business lies in control, support, and risk distribution.
In a franchise model, entrepreneurs purchase the rights to operate under a larger brand's name, adhering to its established guidelines. This often comes with the benefit of an already recognized brand identity, making customer acquisition smoother. However, this association requires an upfront fee and, typically, ongoing royalties or a percentage of the revenue to be paid to the franchisor. In return, franchisees receive continuous training, marketing, and operational support.
On the other hand, a company-owned business offers entrepreneurs complete autonomy. They shoulder all risks, but also retain all profits, without sharing or ongoing fees. While they enjoy the freedom to build their brand identity from scratch and make autonomous strategic decisions, they also navigate the challenges of brand-building and operational responsibilities without the cushion of a larger brand's support.
The choice between these two models often pivots on an individual's financial stance, risk appetite, and the balance they seek between independence and structured guidance.
Franchising: The Route to Entrepreneurship
- Established Business Model: Investing in a franchise means adopting a tried-and-tested model. This significantly reduces the guesswork and can accelerate the path to profitability.
- Brand Recognition: Franchising comes with an already recognized brand. You start with a customer base that already trusts and values the brand, ensuring quicker customer acquisition.
- Training and Support: Franchisors provide in-depth training, equipping you with the necessary skills. Continuous support ensures you're updated with industry trends and best practices.
- Marketing and Advertising Boost: Franchisors often have consolidated advertising campaigns, allowing your outlet to benefit from large-scale promotions without shouldering the entire cost.
- Initial and Ongoing Fees: Franchisees are required to pay initial franchise fees, and there are recurring fees that cover training, marketing, and ongoing support.
- Limited Autonomy: Franchises come with operational guidelines. While these ensure consistency, they can restrict creativity and personalization.
- Profit Sharing: A percentage of your revenue might go to the franchisor as royalties.
Company- Owned Business: Crafting Your Unique Vision
- Unbridled Autonomy: You have the freedom to innovate and mold the business as you see fit. This autonomy can lead to unique selling propositions and a distinct brand identity.
- Full Profit Retention: All the profits generated remain in-house, without any obligations for sharing.
- Flexibility in Strategy: You can quickly pivot your business strategies without needing approvals or conforming to a broader brand strategy.
- Personal Brand Building: There's an opportunity to create a brand from scratch, reflecting your values, vision, and aspirations.
- Higher Initial Risk: With no established blueprint, the risks of failure or missteps are more pronounced.
- Slower Brand Recognition: Building a brand reputation takes time and effort, which means customer trust might be slower to earn.
- Operational Challenges: From sourcing suppliers to marketing strategies, every responsibility falls on the entrepreneur, which can be overwhelming.
- Greater Financial Pressure: All startup and operational costs are shouldered without the backing or support of an established brand.
Sculpture Hospitality: The Franchise With a Difference
If you’re ready to give up the long hours that come with working in a bar or restaurant, but don’t quite want to start your own business from scratch, then Sculpture Hospitality offers an exciting franchise opportunity that may be right for you.
Regain control of your life and gain the flexibility you’re seeking, all while working with an established brand that offers ongoing training, support and innovative new business concepts and product offerings.
You can own your own business with minimal risk. Interested in learning more? Get in touch with Sculpture Hospitality’s franchise team today.