Local x Franchise: The advantages and disadvantages of fast food chains

Franchise is a business like any other, it requires dedication and insight. However, some differences between a local business, opened in an independent way, and a frachise must be taken into account.

First, from the point of view of market access, franchise is much better than a personal business, because it has a known trademark. It just saves an enormous amount of marketing work with dissemination. When we buy a franchise, we have the rights to use the trademark which has identification with the consumer. When we set up an independent business, we must establish our own trademark. Besides that, it is costly, and we must understand that if is the best mark to our business.

Concerning the product or service, when you open an independent business, you must have a perception what will be commercialized, whereby the franchise just has the concept. This has a good and a bad side, the bad side once you have an innovator idea you cannot put his in your business.  The big success of franchising is because the product brings a trade name associated. Besides the trade, it has too an interesting operational know-how background, and a product or service which had been tested and proved. The trademark is already known and this helps a lot. To invest in a still consolidated trademark costs much more than open your own business. The franchiser must pay the investments made by de franchise owner in the trademark consolidation and maintenance.

The commercial location is another advantage. Theoretically, the franchiser still has the concept of localization and the local business doesn’t, his choice will depend much more of his own criteria than professionals. On the other hand, from the perspective of investments, the independent business takes advantage. You can invest less in your own business than in a franchise, which has construction, local and working capital demands. It has business standardizations, which is known in the market and imply in a huge investment, greatest than if you have your own business.

The lack of flexibility is still a problem. You are not independent. You have to stick rigidly all the franchiser determination. You can not invent. The franchisor specifies the machines, equipments and materials. He selects the best suppliers. The franchisee relates only with the approved suppliers, he does not have liberty to buy from any one.

The decision of coming into the business world is very important. To opt between a local and independent business or a franchise is a challenge. Before the decision, you must do an evaluation of all advantages and disadvantages and identify your entrepreneur. Chose a segment that will bring pleasure working in it, and the things will be alright.