Franchising vs. Starting from Scratch: Pros and Cons

In the UK, there are two main business models you can follow. The first is starting your own business, better known today as a startup. The second one is buying a franchise and trusting another successful business to give you their blueprints to success.

Today, we will help you choose the one that best fits your needs. We will go through the pros and cons of both models and hopefully make the choice, if not obvious, at least a bit easier. 

What is a franchise?

The franchise system is a business model that has the characteristic of allowing individuals to own and run their own businesses, but they may be based on an already successful business’s established brand, support and systems. 

Such collaboration is the essence of franchising, where the entrepreneurial capacities of the franchisee are merged with the proven business concept and the brand recognition of the franchisor. As a counterpart of this arrangement, franchisees usually pay licensing fees and royalties for the right to use the franchisor’s brand and enjoy their support.

Franchises are offered in different shapes, starting from fast-food restaurants to retail outlets, and now they have also contributed to the development of the cleaning industry. Yes, it may have not come to your mind, but nonetheless, you have been consuming franchises every day. McDonald’s, Starbucks and Fantastic Services are all global franchises having huge numbers of franchisees, sometimes even thousands. Thus, which type of business venture do people prefer to engage in?

Franchise’s pros

Among the list of the benefits of making a choice is the fact that the franchise immediately has brand awareness. The franchisees get an advantage of the reputation that the parent company has built, therefore, they have the trust and reputation of the clients right at the time of beginning. 

The situation is illustrated by the case where you would choose Franchising with Fantastic Services and then expect more than 50,000 monthly clients. Certainly, if you start your business by yourself, you will be forced to work nonstop, at least for a couple of years, before getting to such a client base.

Therefore, franchisees get independence quickly, which is almost a rule in their case, and they usually pay all the debts in a few years. Based on the business plan and the efforts of the entrepreneur, nevertheless, the feasibility will be achieved.

Yet business owners get more chances, thanks to the well-prepared and continuing coaching which are designed to teach skills and know-how to manage the business on a good level.

One more significant advantage is an increase in operational efficiency. Franchising is a possibility for the franchisee to exploit the results of already well-established systems, leading to economies of scale and the effective streamlining of daily operations. This is thus a means of decreasing the costs and delivering the profit faster.

Financial aid is normally more readily available for franchisees. Bankers usually prefer to provide their business funds to franchises because the success of the brand is already proven. This can be a particularly useful tool for those with small assets who want to get involved in the cleaning franchise industry, which is rather competitive in nature.

The biggest advantage of franchising lies in the success rate. Over 85% of franchised businesses manage to have at least some level of success. This is a valid point, and indeed it might be one of the reasons why you decide to save money.

Franchise’s cons

Despite the promising impacts of franchising, it is best to weigh things down and consider the downsides as well. Franchisees in duress must live with the limitations of the franchisor’s regulations. Such an absence of freedom can be counterproductive for businessmen who are eager to try new things or to respond to the local market requisites.

Franchising usually requires a large capital outlay for the initial costs. Franchise fees, royalties, and other financial commitments might be a burden to those who have small capital amounts. This is a very important issue for those who want to become franchisees. They must be very careful to go through the financial implications and find out what return on investment they will get. In other words, you shouldn’t start a business if you can’t support yourself for at least 6 to 12 months.

What is a startup?

On the other hand, “starting from scratch”, or a “startup”, is a completely new business entity that lacks the support of an established company and existing systems. Where franchises start with an already established and tested model, startups are often born with a fresh and unique idea, and they often succeed if they can provide a solution to an unmet need in the market. Regarding the UK cleaning services industry context, the cleaning startup would imply establishing a new company to deliver cleaning services with possibly specialised service offering a unique or novel approach.

Startup’s pros

The first reason for the owner to begin a cleaning business in UK is the freedom to tailor the brand, services and procedures to their own vision. Startups’ primary advantage is the ability to explore new approaches and adjust to changes in market conditions promptly.

This is especially true for startup owners, as they are in total control of the decision-making process of their own company. They can re-model their business strategies, manage marketing strategies differently and even offer new services with no limitations imposed by the franchisor.

Besides, startups are not limited to their territories or presence in the market that have been established. Considering the relatively easier access for entrepreneurs to develop their business in the way they envision, they can try out different markets and modify their products to reflect the changing consumer preferences.

Last but not least, entrepreneurs who run startups enjoy full ownership of their intellectual property as they are not subject to the franchisee’s ownership rules which are in place to restrict the brand from being used in illegal or improper contexts.

Startup’s cons

Entrepreneurs should set aside some funds to be utilised in marketing initiatives to build a brand name for their products and develop consumer trust. Also, the startup founders may have a tough time learning and adjusting as this is the first time for them. The need to engage in business operations, marketing and customer acquisition is intrinsically complex and requires you to be proactive and willing to adapt to unforeseen challenges as they come.

Apart from that, it will be tricky to raise capital for a startup as opposed to a franchise. Lenders consider startups as high risk because the lack of a proven business model and the absence of an established brand can be factors in their assessment. 

On top of this, startups that do not have operational systems given to them by franchisors have to spend time and resources in trying to develop their own efficient processes. This could be a tedious experience that may lead to doing some experiments to find the most workable approaches.

The biggest issue to ponder over is the controversial statistics. About 90% of all new firms collapse within five years after start. This is so much that anyone will start having second thoughts about investing their money.

Anyway, if you daring enough and if you are absolutely convinced of your project, you will jump ahead for sure.

The difference between buying a franchise and starting your own business.

Whether to choose a franchise or a startup is a critical decision that varies from person to person depending on their business ambitions, risk tolerance, and goals. 

Franchises offer a faster and safer route for entering the market with a running system, while startups provide the utmost freedom and unrestricted ingenuity. This is why franchisors are not that different; they were all startups at some point.

What do you need to know before buying your first franchise?

A prospective franchisee who wants to immerse him/herself into the franchise environment first has to investigate the franchised business. This involves examining in detail the franchisee’s reputation, comprehending the financial liabilities involved as well as scrutinising the franchise agreement. Getting ideas from the existing business owners, and then talking over with professionals on the legal and financial matters are helpful to make the plan.

Firstly, they need to look at franchisors which have a history of providing support and assistance to their franchisees as this is the most crucial thing. Moreover, you will definitely incur the cost of the royalty fees, which is why it is only fair for the franchisor to provide you with something in exchange, be it a team of support, technology or market-leading products. It stands to reason that the most successful franchisors will be ready to provide all of them.

What do you need to know before starting your first startup?

For those who have relatively less experience and are interested in starting a cleaning business from the beginning, the first and essential step is developing a thorough business plan. This plan has to clearly specify the market segment, differentiating factors, marketing strategies and financial performance forecasts. Entrepreneurs are, at the same time, supposed to be able to deal with the problems of establishing credibility, and they, too, should consider mentorship and industry knowledge.

In the UK business environment, which continuously evolves startups serve as the key players which innovate new products and adapt to the new market needs. For those who aspire to take the road less travelled, it is advisable to celebrate the joy and intricacies of doing business as a startup.

What is the best for you?

Ultimately, it all depends on your ambitions. If you simply desire a better, relatively secure life with more time for your family, children, and friends, then a franchise will provide you with just that. 

Using someone else’s know-how, you can establish a successful business that can give you a comfortable life. However, though you can grow and become even richer, you will never be the one who sets up the rules.