Should I buy a franchise, or should I buy an independent business?

If you have been planning to buy a business, there is a good chance that you are wondering, is it better to buy a franchise or an independent business? Some good reasons to buy a franchise can include:

• If you have never owned a business before, an established franchisor can provide ongoing training, support and guidance
• They generally use a proven business model
• The franchisor typically helps with branding, preparing advertising materials and signage
• Franchisors often negotiate good deals with suppliers as they are likely to have the buying power associated with a large group of franchises
• There is a network of franchisees that you can network with and with whom you can discuss any questions and issues that you may have

It is important to note that there are significant differences between buying an established franchise territory and buying a new territory. Generally, an established territory will have customers, employees, sales and fully set up premises in place. In contrast if you are setting up a new franchise territory or store from scratch (called a greenfield franchise), there are greater risks. For example, the location will not yet have been proven to be able to profitably sustain the business. You will have to set up the business premises from scratch, hire staff and build up a customer base from the ground up. This means that you will need extra capital to sustain yourself while the business is being built up.

If you prefer to be in full control over all aspects of your business, you may prefer to buy a business that is independent. Whilst you are unlikely to have the same amount of support and training, an independent business does have the following benefits:

• You set the rules and are not restricted by franchise guidelines
• Trade is generally not limited to a particular territory
• You can change your business model if necessary

Overall, the choice between buying a franchise or buying a business that is independent depends on your personal preferences. That said, a franchise, with the support that it provides, could be a great choice if you have never operated a business before.