Small Business or Franchise How to Decide - VR Business Sales Blog

Has Sold More Businesses In The World Than Anyone.®

Business Broker Franchise
Call VR Business Brokers 954-565-1555


Monday, December 12, 2016

Small Business or Franchise? How to Decide on FacebookBusinesses For Sale on LinkedIn TwitterBusinessesForSale on Google Plus

Having decided you want to be your own boss, next you have to choose not just your sector but whether you start a business from scratch, buy an established independent business or buy a franchise.

Each option has its own merits and drawbacks and which one suits you depends on your personal attributes and what you want from the venture.

If you want a fully functioning business that makes money quickly then you almost certainly need to buy a business – franchised or otherwise.

The franchise option

Taking on a franchise means you follow a tried-and-tested business format. It’s naturally reassuring that the business model has succeeded several times elsewhere; you simply follow the processes set out in the training provided by the franchisor.

The downside is that your franchisor, which largely funds the enterprise at the beginning, will have ultimate say over how the business model evolves. You’ll still very much be your own boss, but you’ll lack autonomy over prices, product range and marketing campaigns.

Once you start to show a profit – which is often quite soon after opening, since you’re following a proven formula –you’ll be expected to pay regular royalty fees stipulated in your franchise agreement.

There are limits to your choice of sector too. The franchising model works well for sectors where the template can be replicated easily, like fast food or cleaning, so you’re unlikely to see a franchise in sectors requiring high levels of specialist skill like farming or engineering.

The small-business model

By contrast, buy a small business and you have complete autonomy over every part of the business and the broad direction of travel. And you can enter – contingent on having enough cash and, we would recommend, the right skills and experience – whichever sector you want.

With this freedom comes responsibility, however. There’s no handbook for how to run the business and it could take time to stamp your ideas on the business.


The cost of an independent business for sale obviously varies wildly depending on its revenues and physical assets, but as a general rule it’s more expensive than a franchise.

A franchisee will usually benefit from a more affordable up-front investment, though he or she will inevitably have to commit to a regular schedule of ongoing royalty fees. And when it comes to refurbishments and maintenance or other business costs, a non-negotiable franchise agreement usually requires the franchisee to fund such expenditure without delay when the franchisor deems necessary.

Brand reputation

A new franchise owner purchases the right to sell under an established, recognised brand. This is a considerable trading advantage over a start-up; customers know what they’re getting in terms of products, prices and service delivery.

That said, you still inherit an established reputation when you buy an independent enterprise and, hopefully, a decent number of loyal customers. And though franchisees buy into an established brand, the business itself is essentially started from scratch (unless you buy a franchise resale).

Support and marketing

Not backed by the marketing clout of a nationwide chain like Subway – which can even afford ads slots during prime-time TV ad breaks – a small-business owner must do his or her own marketing with a generally more modest budget.

A franchisee also has the franchisor on hand to offer advice and support when needed and comprehensive training at the outset.

Nevertheless, while ownership of an independent business can feel like a lonely vocation, you can get support from business mentors and trade associations.

And if you buy a business, sometimes the vendor will agree to stay on in a consultative capacity as part of the sale agreement. This can involve training you in all relevant processes, introducing you to suppliers and key customers and generally effecting a smooth transition.

Chances of success

Franchises – provided you choose a reputable, thriving brand – are generally seen as much more likely to succeed than start-ups, where the founders inevitably have to make their own mistakes.

How it compares to buying an established business is less clear-cut; it all depends on the business or franchise in question.

With this in mind, a successful outcome really depends on thoroughly researching your options and choosing the business model that suits you. Neither ownership model is inherently superior; it all depends on what suits your personality and aspirations.

If you value creativity and control above all else, then you are likely to be happier as an independent owner. If an uncomplicated business model with a steady income appeals, then a franchise opportunity will probably be more to your liking.

By Melanie Luff, Online Journalist for, the market-leading directory of business opportunities from Dynamis. Melanie writes for all titles in the Dynamis Stable including and


Add your comments


  • +1 (954) 565-1555
  • 2601 E. Oakland Park Blvd, Suite 300 Fort Lauderdale, FL 33306

Copyright © 2019 VR Business Brokers. All Rights Reserved.