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Pros and Cons of starting a Franchise vs Own Business in Kerala, Kochi and India

Setting up a small business is a major career step. One of the major decision should relate to whether to set up an independent business or buy a franchise. Each path has its own promise, as well as perils. Weighing the benefits and costs of franchising against those a traditional (non-franchised) business should begin with a self-assessment. Are you able to follow a prescribed system, or do you need the freedom to innovate and experiment? Do you need total independence in every aspect, or can you follow a ready-made system?
There are many successful brands abroad and outside Kerala that can create a market in Kerala.
In terms of "cost/benefit," there is a price to pay for buying into a franchise system. But there also is a price to pay in starting your own business. The pros and cons, detailed below, must be weighed against the benefits, in terms of both investment and personal values and goals.

Brand Familiarity
Franchise offers uniformity and replicability. Customers know this and seek out the reliability and familiarity of their favorite brands, which have been established over years or decades. Customers like to associate with branded services and products.

Control/autonomy
When you start your own business, you're in control over every detail, large and small. With a franchise business, you sign an agreement to follow the rules laid out by the franchisor. Franchisees don't "own" their franchise unit: they are awarded a license to use the franchisor's brand name, operating system, equipment, uniforms, etc. that have been fine-tuned and perfected over many years.) You then control your franchise unit in terms of the culture and values and who you hire and fire, but you must follow the franchisor's operating system.

Operating system
Would you rather invent something, or buy one ready-made? If you're creative and the innovative type, starting your own business is the way to go. A franchised business provides a complete, out-of-the-box business, ready to "plug and play." All you need to do is to follow the instructions manual.

Research on Equipment and supplies
When you start you own business you will need to research and obtain the proportions of supplies and the exact amounts to be used for each product. Researching can take time and effort but is necessary to outfit your new business with everything you need to succeed for e.g. equipment to buy, finding suppliers, and negotiating deals. Franchisors can provide invaluable help in knowing both what and how much to buy - often at reduced prices. You can sign up with a franchisor who's done this hundreds of times and be handed a shopping list of exactly what you need to set up shop, allowing you to open for business more quickly than if you had to research it all on your own.

Economies of scale
If you're a sole entrepreneur, you have the buying power of one. If you're a franchisee, your franchisor can negotiate bulk rates and pass along the savings to you. Also, having the power of a recognized brand behind you often eases the mind of a supplier in extending credit: if a successful franchisor is willing to trust you, vendors are more likely to do so as well.

Financing
Starting your own business can cost less than buying a franchise, and many entrepreneurs have started on a low budget and succeeded. But most new businesses require start up capital, especially for retail space and equipment. While most franchisors do not supply financing, many have relationships with lenders who will view that brand's referrals more favourably than an independent business owner just starting out.

Marketing
As a sole business owner you're on your own when it comes to marketing and advertising. For e.g. If you're a Pizza Hut franchisee, you have the power of the brand's multi-million-dollar national and regional marketing and advertising behind you. There's a price to pay for these benefits: a monthly contribution to a national advertising fund. If it is your own business you can decide the scale of your marketing, and initially a word of mouth referral and online marketing services will help your business without having to shell out a huge amount.

Faster ROI
For any business you set up the Rate of Investment i.e. the income you can earn from your capital employed must be ascertained. Whether you set up a business or you franchise one you need to be confident that you can create a demand for your services or goods. Some franchises are not in demand while some attract customers.

Training
You may be the best at what you do, but do you know how to manage a business, hire and train employees, market your product or service, keep the books, etc.? When you start your own business, you must learn all these things on your own, with some short falls. Franchisors provide new franchisees with extensive training in every aspect of their new business. And many offer advanced training to help you stay on top of your business as it grows.

Franchisor support
Most entrepreneurs, franchised or not, love what they do. In fact, they would rather do what they love, which can result in neglecting how they manage their business. Additionally, caught up in the day-to-day details of such "mundane details" as taxes and supplies, they fail to innovate and to develop as leaders and executives. Many franchisors provide field support specialists to help keep their franchisees on track, training them to become managers and leaders "working on the business, not in it."

Peer support
If you own your business, you can join the Chamber of Commerce, Rotary, or other local business organizations, so you're not completely alone. As a franchisee, you receive ongoing support not only from your franchisor, but also from your fellow franchisees. This can be locally, regionally, at annual national conventions, through an online support network, or just by picking up the phone. Local business groups are invaluable for the networking connections they can provide, but who better to ask for help with your business than someone who's already solved the problem you're facing for the first time?

Product/service innovation
Introducing a new product or service that flops costs precious time and money. If you own a traditional business, it's your time and money down the drain. Franchisors develop new products, try them in their company-owned stores or with other franchisees willing to test them. So while it may cost a franchisee some big money to install new equipment or introduce a new store design, the ROI is more likely than with your own new great idea.

Site selection
There's a lot of competition out there in the retail sector. A franchisor can provide teams of real estate experts, advanced site selection software, and years of experience in finding the best sites for their brand. They also can provide expert assistance negotiating leases with landlords - an oft-ignored, yet critical component of profitability.

Agreement
In your own business, the only person you have to get along with is yourself (and your customers and employees, if you want to have any). Many franchise experts describe the franchisor/franchisee relationship. You don't sign on for life (it's usually 5, 10, or 15 years), but you do need each other to succeed. That's why it's so important to ask if your values and goals align with those of the franchisor. They award a license and need to check your performance every month. It is an ongoing, win-win proposition.

Exit strategy/resale value
Selling an independent business can be very lucrative - but the pool of potential buyers is smaller than with a known brand. A prospective business owner often opts for the safety and familiarity of a known brand over a private business. And in tough times if you need to sell you may have to do so at a bargain basement price - if you can find a buyer at all. With a franchise, there's always a buyer of last resort: the franchisor, who can always buy your unit and run it as a company store until they find a suitable buyer.

Passion and enthusiasm are key ingredients in steering a business from start up to success. Both independent businesses and franchises do succeed. However, there are key differences that need to be considered when determining which type of business is the best fit for your personal and business goals.

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