Franchise Versus Independent Business Opportunities

by Steve Hearon

So, you've decided to take the plunge and go into business for yourself! Kudos, but now the choices really get interesting. Existing business, or startup? Service business, or retail? Franchise, or independent? Now there is a great question. Why franchise when you can start something on your own? I believe (full disclosure, I have made my career in franchising and still do) that Franchising is the ultimate way to mitigate risk in your decision to own a business. Why? Several reasons:

Systems - most franchisors have been doing what they are doing for a long time (if they haven't...well, observe caution); therefore, you have the opportunity to learn from the mistakes of others in the past. They have a road map for you and you can spend your time on execution versus strategy, especially early on. They also will likely have systems in place to make everything easier from start up to general operations.

Support - having someone to turn to when challenges pop up...its like having a consultant on your payroll. Advice on personnel, marketing tactics, customer service...essentially all areas of the business from experienced professionals.

Brand Recognition - this will be a tremendous advantage when trying to attract customers and employees and should be one of the primary reasons you select the franchise you select. If a franchise has been around for years, or ideally decades, they have been pouring resources into brand recognition and you will benefit from this on day one.

Peer Learning - any strong franchise system will enable you to interact with others who are out there on the front lines doing what you are doing, and this is where many of your most valuable lessons and ideas will come from - your fellow franchise owners.

Exit Strategy - If you start your own business, who will buy it in 5, 10, or 15 years when you are ready to move on? What will it be worth? Most banks put a value on a business based on EBITDA (Earnings Before Interest Taxes Depreciation and Amortization), or cash flow. Once that is calculated, they come up with a multiple and thus value your business. Being part of a strong, healthy, widely recognized franchise system should help increase that multiple and make a big difference in what you walk away with. Also, most great franchisors have strong recruiting teams in place to help you market and sell your business when that time comes. Do not underestimate how valuable this is.

Going into business for yourself is a big decision, but its only the first of several as you evaluate which path to take. Deciding on going it alone or joining a franchise must be taken as seriously as your initial decision to become an entrepreneur. For much more on this subject, check out The E-Myth (Gerber).

Steve Hearon
VP of Franchise Development
CertaPro Painters

Learn more about CertaPro Painters at topfranchises.franchisebusienssreview.com.

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