Buying a franchise vs being independent

For many Australians the idea of running their own business is a long-held personal goal, and to be fair even the world’s largest companies started life as small businesses.


The idea of creating, nurturing and growing your own business from scratch has plenty of appeal but buying into a franchise offers important advantages.

For many Australians the idea of running their own business is a long-held personal goal, and to be fair even the world's largest companies started life as small businesses.

However, while the entrepreneurial spirit may burn bright among Australians, it doesn't pay to take a romanticised view about what it takes to achieve long term success with an independent business. In a highly competitive commercial world, start-ups face very solid challenges including the need to build a brand, develop strong relationships with suppliers, grow market share and nurture sustainable expansion.

That's not to say that small businesses can't be successful. Far from it. But if you do plan to start a business it's critical to act on logic – not emotion. Not all independent businesses fail though many limp along delivering a very modest return to their owners. Among those that don't succeed, the financial cost can be considerable especially if debt finance is used to fund the venture.

Don't be put off. Self-employment certainly isn't all beer and skittles but if you make a success of it, running your own business can provide enormous flexibility and financial rewards. Investing in a franchise – either in a new location or buying an established outlet, doesn't mean it takes less commitment to achieve success. But it does offer an undeniable head start. Here's why.

Brand recognition

A proven brand is a major bonus for franchisees. Consumers often gravitate to known brands, reassured by a sense of familiarity and trust.

Lenders are typically more comfortable with known brands too – after all, a proven brand with an established track record that is already highly regarded among its target market is likely to be a far less risky proposition than a complete newcomer.

Established systems

The established operating systems of a franchise are important from an administrative perspective.

The franchisor will have clear systems in place, removing the need to trial and error that independent start-ups often face. This allows you to keep better track of operating results and meet tax and other legal obligations, and avoid common mistakes often made by entrepreneurs starting their own business. Quite simply, you can concentrate on growing the business knowing the back office procedures are sorted.

Support and mentoring

Choosing to be part of a franchise means you're not going it alone. As Mortgage Choice franchisees know, there is a wealth of support available when you team with a reputable franchisor.  

This support can – and should – include initial training, ongoing training, mentoring, marketing support, help with lead generation and the presence of an expert Head Office team that you can always speak with if you have questions or concerns.  

It can be very reassuring to know a team of people who want you to succeed is available to lend a hand. Your fellow franchisees can also provide collegial support, acting as a sounding board for what has worked for them and offering tips, suggestions and opportunities to network to achieve mutual business growth.

Clear capital requirements

One of the less obvious benefits of buying into a franchise is that the initial start-up costs are laid out in clear terms and you know exactly what your money is buying.

It can be a very different story for independent small businesses where an element of trial and error can make it difficult to determine exactly how much capital you will need to get started. This brings with it the possibility of wasting money on unnecessary costs, or worse, finding yourself starved of working capital and being forced to turn to expensive debt funding.   

To discover how a Mortgage Choice franchise can help you achieve your goal of self-employment, call us today on 1300 650 330.

Posted in: Business tips

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