Everyone has an opinion when you ask them about whether you should buy into a franchise opportunity or go it alone and build an independent business. Of course, personal experience (and hearsay!) has a lot to do with these opinions, but the truth is there are some practical realities you should consider before jumping either way.

Full disclosure - Tax Store operates a franchise model, so we are obviously huge advocates of the benefits of franchising. However, we know it’s also not the right model for everyone. We strive to offer unbiased financial education for our readers, so in this article we will provide a balanced review of the advantages and disadvantages of franchise opportunities so you can make your own mind up about whether it’s right for you.

The exciting news is, you’re obviously motivated to do things differently now and become a business owner. So, hang on to that enthusiasm and let’s explore the pros and cons of becoming a franchisee versus an independent business owner.

The pros of buying a franchise

• Independence WITH support: A franchisee owns and operates their own business but also benefits from ongoing support from the franchisor and the other franchisees
• Established brand and reputation: Hit the ground running and take advantage of customer confidence by launching a business with an existing track record.
• Existing processes and procedures: Take advantage of proven systems and reliable operating processes and procedures that have been established by the franchisor, so you can get started immediately without making expensive mistakes.
• Expert training: Start trading asap by getting quickly up to speed with focused and personalised training direct from the franchisor.
• Effective marketing: As a franchisee you will benefit from strategic business development and marketing initiatives, set up and run by head office to benefit all franchisees in the network
• Ease of funding: It is typically easier to secure funding for a franchise than it is to convince lenders to support a new independent venture
• Competitive edge: As a franchisee your ability to compete for work against larger competitors is improved.
• Invaluable and immediate network: Other franchisees are usually only too willing to offer advice, support and collaborative ideas. You will benefit quickly from the network’s knowledge if you are open to listening and then contributing; you’ll feel part of a broader team rather than alone in business.
• Reduced start up costs: The purchase cost of an existing franchise may well be cheaper than the cost of launching your own business. This will of course depend on the nature and location of your business, but it’s a factor worth considering.
• Minimised failure rate: Independent businesses in Australia have a much lower success rate of survival than franchises. Increase your chance of success by joining a franchise group!

The Cons of Buying a Franchise

• Legal obligations and potential to grow: A franchise contract is a binding agreement which must be followed. These agreements may place certain restrictions on franchisees such as geography, pricing or service delivery process, so you need to be aware of the implications for your business growth.
• Flexibility around suppliers: Some franchises dictate where you can purchase products or services from, often due to bulk buying power and/or consistency. Whilst often this is a benefit, it can be restrictive if you want to try something new.
• Reputation is tied to the entire network: The performance of the entire franchise network contributes to the brand’s reputation and customer confidence. If there are poorly performing franchisees your business may be unduly impacted.
• Ongoing fees: Franchises have ongoing fees which means a percentage of your profits goes to the franchisor. Whilst you know this at the outset it can be challenging to happily continue to contribute this once you’re on your feet.
• Monitoring and reporting: Depending on your personality, some people may find the necessary monitoring and reporting process intrusive.
• Cost of entry: Do your math – are the costs of purchasing the franchise actually less than if you were to set up the business on your own?
• Termination clause: There may be financial implications if a franchisee wishes to break the contract and/or leave the network early for whatever reason.
• Future proof: The franchisor may decide NOT to renew your agreement at the end of the initial term. You are then out on your own after all the hard work and financial investment. There is also a risk that the franchisor may go out of business therefor leaving all franchisees on their own.
• Restraint of trade: When you decide to exit the network there will likely be a restraint of trade clause, restricting your ability to conduct similar work for a period.

The major benefit of buying a franchise versus establishing your own independent business is that franchising gives you access to reliable processes and systems and a proven business model. Backed by decades of experience and success, the training and operating principles

associated with most franchises offer you a robust and successful platform on which to build your business ownership dreams.

Enquire now about franchise opportunities