Bar & Restaurant Management Blog

Franchising Vs Owning: What's Best For You?

Written by Krista Dinsmore | December 07, 2022

As the hospitality industry continues to be challenged with issues such as staffing shortages, high inflation, and cost cutting, many people within the industry have the goal of quitting their jobs and becoming their own boss

Being your own boss can give you the opportunity to achieve a better work-life balance, set your own hours, allow you to pursue something you are truly passionate about, as well as get you away from the hard work and long hours associated with the hospitality industry right now.

If you know that you want to run your own business, but are not sure how, there are two primary options. You can either purchase a franchise business or you can launch your own startup from scratch.

In this blog, we take a look at franchising vs owning, and the pros and cons of each.  

 

Franchising

Franchising is the process of purchasing a license from an existing business, which, once acquired, allows you to access the company’s business processes, trademarks and to sell their products or services in a predetermined geography. 

Owning a franchise requires you to pay an initial fee, as well as ongoing royalties, to the franchisor. In return, you will receive a license that grants you permission to use their branding, ongoing marketing support, training, and the license to see the franchisor’s products/services. 

As a franchisee, you will follow the organization’s business model, which will lay out exactly how your business should operate and what products/services you should sell. You will run the day-to-day operations of your business, manage any employees and deal with clients, but the franchisor will take care of the big-picture tasks and overall brand. 

Checklist: Are You Ready to Own a Hospitality Franchise?

The pros of franchising

  • Ongoing guidance: Experts will be with you every step of the way to ensure you have the best chance of success. 
  • Training programs: Franchisors offer training to help you learn new skills that promote growth.
  • Success rate: Franchises have a better rate of success than start-ups. 
  • Financing: It’s easier to secure financing for a franchise business, since it’s seen as a safer investment. 
  • Operational assistance: Franchisors will provide you with operational assistance where necessary. 
  • Marketing: The franchisor will take care of the brand’s overall marketing, you’ll just have to market your business in your target market. 

 

The cons of franchising

  • Limited creativity: Since you have to adhere to the rules of your franchisor, franchising offers limited creative opportunities when compared with owning your own start-up.
  • Initial investment: In some cases, the initial investment for a franchise can be expensive. It’s always worth doing some research on the right opportunity for you.
  • Franchise contracts aren’t permanent: Franchisors can decide not to renew your contract after the time frame is up, although most will not leave this as a last-minute surprise.

Owning a Business

Owning a business is the process of creating a new company and developing a unique product or service that you can bring to the market and sell to customers. 

A new business aims to fill in the gaps that existing products or services are leaving in a market - whether that be a new category of goods or services, or disrupting entrenched ways of thinking or doing business.  

The pros of owning

  • Fewer upfront costs: As a business owner, you can decide how much you invest from month to month. When you are first starting, you can invest as little or as much as you feel comfortable with. 
  • Creativity: You own the business, and you can do whatever you want. That means you can be as creative as you need to be to see results. 
  • You're the boss: With your own business, you make every decision. You run the business exactly how you want it to be run.

The cons of owning

  • Greater costs in the long run: Owning a start-up is generally more expensive in the long run than a franchise. 
  • Higher risk of failure: Small businesses have a much higher risk of failure, with the majority failing in the first couple of years. 
  • Minimal compensation: It can take a couple of years to see any real results from owning your own business, if you even see any results at all. This means you are investing more than you are earning. 
  • Lack of resources: Unlike with a franchise where you have marketing, training and daily support, when you own your own business you are all on your own. All these elements have to be done by you.

Are you interested in learning more about franchising and whether it would suit your lifestyle? Get in touch with Sculpture Hospitality today. We have a range of franchise opportunities with different investment opportunities, where you can become an expert in helping restaurants and bars grow their profits.