James Roberts

Franchise or startup: Which one is best for you? 5 tips

Five facts about Franchise or startup

Do you think about choosing a franchise concept or creating your own? Here are five key facts about franchising that you need to know.

1. Franchisees go bankrupt and will go bankrupt

This is the cynical truth of all major franchise companies. But, by the way, any entrepreneurs go bankrupt, regardless of whether they have chosen a franchise or are building a business from scratch.

A franchise, of course, reduces the risk factors of, for example, that you go broke in the first month. Nevertheless, statistics accumulated over more than 150 years of franchising history suggest that a franchised business is at risk. When you buy a franchise, you open a business that is just as risky as any other entrepreneurial activity.

Franchising companies that have let hundreds of thousands of people through are reluctant to share this information. But we see that signs change, people call in, rent space for shops, restaurants, and then they are replaced by other signs and companies.

Face the truth and always assess the situation from different angles, carefully consider the business plan. You should not have the illusion that buying a franchise, you buy success.

First of all, consciously decide to open any business. I wish you only positive results. But a franchise is not a magic wand. You cannot buy a guarantee that your business will quickly pay off and be profitable.

Someone thinks that buying a franchise, he buys a ready-made business, profitable. This is not true. Success will come only if the entrepreneur is ready to work, is responsible for the business he is undertaking, works in a team with the franchisor, follows the instructions developed by the parent company most clearly and consistently, and at the same time shows flexibility and stress resistance in case of emergency.

2. There is no franchise law in Russia

In Russia, in the field of franchising, everything is just beginning. It is possible that within five years they will adopt special laws governing franchising. But now they are not. You will not see a single franchise agreement or franchise agreement. All transactions in the franchise market are held within the framework of existing laws governing trade, services, education, use of the trademark, intellectual property rights, and patents.

In most cases, the franchise is sold under a commercial concession agreement, license agreement or supply agreement, which are based on the Civil Code of Russia. Always carefully study the contracts that you intend to sign.

3. A franchised business has a better chance of survival than a startup

Check the statistics of Internet search engines. Thousands of people are looking for information on how to open a business: a bakery, kindergarten, restaurant, beauty salon. High entrepreneurial activity is a key driver of economic development in any country, including ours.

You can open any business yourself, under your own name or under the name of your companion or life partner, for example. But since in our world, technologies develop and concentrate in the hands of technology companies, people often choose a franchise. It is very difficult to compete with a large network brand for a unique beautiful coffee shop or pizzeria. Neither the quality of delivery nor the federal advertising single point won. Therefore, franchising is actively developing around the world and in Russia and it is not in vain that it is highly popular.

The risk of closing a single point is indeed substantially higher than the failure of a franchise business. This is evidenced by the statistics of many companies and research institutes studying economics.

Imagine that you are buying the franchise of a large chain restaurant or cafe. You will be warned about all the nuances associated with its opening, legislation, and even with the insurance of your point. They will explain how to comply with high standards of service quality, provide recipes for unique dishes, and help to decorate the interior.

When starting a business, one must take into account not only the nuances of purchasing power but also many other factors. Large companies often have legal departments that are required to study regulations. Therefore, the risk is excluded that any inspection body will come to you and close the point, which, conditionally, did not manage to break through the first check. This is a very significant plus in the field of catering, children’s education and in most other types of business.

Will your product or service be in demand? The main hope should be assigned only to yourself. You need to skillfully use what the parent company offers, but always keep your finger on the pulse, independently study and control all business processes.

4. Having bought a franchise, you really can get rich

I can confidently talk about this, as I have seen and see many examples of successful franchisees. When I managed the franchise chain of stores under the Expedition brand, which at that time consisted of more than 350 points, I observed that the people who bought the franchise were able to realize themselves as entrepreneurs, bought a new car, an apartment, and became happier.

The success of an individual, like the success of a business, consists of many factors. When thinking about whether to embark on the path of entrepreneurship, you should know that there are people who have already improved their financial condition, have become leaders in their city and have become rich thanks to the fact that they once opened a franchise business. They managed to open points in the right places, having got the know-how, technology, quality standards. They were able to offer customers food or goods that were not yet in this city.

When buying a franchise, one must set clear financial goals. Answer your question about what you want to achieve in life, including thanks to a project that you buy on a franchise.

5. When you open a franchise business, you connect your life with a specific business, a certain area

Approach this area consciously and carefully. Look for destinations that are close to you in spirit. You should like the business you plan to do. You will plunge into a new topic with your head. If you are not interested, you will quickly burn out.

Do not treat the franchise like a cow or a car: opening a business, you change your life in many ways, take on certain obligations. Be prepared for the fact that your life will not be the same and, I hope, changes will bring you joy.