Franchise vs Independent Business
Those looking into investing in a business often weigh the pros and cons of franchises versus independent businesses. In this post, we will both investments and what investors can come to expect when they make their purchase.
Individuals who leave corporate jobs after many years of working there tend to fit comfortably into franchises. They like the order and knowing things will be done a certain way. They have followed rules for many years and like having everything laid out for them. This also applies to individuals who work best in very structured businesses. Some individuals want to own their own business so they can do what they want to do and how they want to do it. They don’t want anyone telling them how to run their business. Neither is the wrong decision. You know where you would be the most comfortable, and that is where you should be.
There are lots of types of franchises. Many people think of franchises as fast food, but that is only one type. If you know what type of business you want to own, you can compare the cash flow statements from a franchised business and an independent business. Another option is starting a business franchise by purchasing a franchise from a franchisor. You would have a greater risk of failing than if purchasing an ongoing franchise business or independent business, because they are established. However, if you are considering starting a business from scratch or starting a franchise business, the franchise business would be the safest and easiest to start. The franchisor would do the research for the location and determine the demand and demographics in the area chosen. The franchisor would also provide training, be available for questions, and stay in close touch, requiring regular reports. If purchasing an ongoing franchise or an ongoing independent business, the financial records should be the same for your review, as the royalties and any other expenses will be deducted from the income. You will be looking at the adjusted cash flow for both. You may find the royalties paid were not really a factor, as being associated with the franchisor brings in more than enough revenue to offset the royalties.
If you’re considering starting a franchise in windows and doors, reach out to us at Shield BP today!