Foreword: My name is Zain Khwaja and as the owner of the Brand U.S.Pizza, India’s 3rd largest pizza brand with 75+ outlets, among others, and 20 years of experience in franchising. After seeing many entrepreneurs struggle with this decision and many more who made mistakes, I have decided to share what I know.

Starting a business is a dream shared by many, but the statistics are sobering: 1 out of every 4 new small businesses fail within the first year. The allure of entrepreneurship is undeniable, but for those considering the path of business ownership, there's a fundamental question to answer – should you franchise an established brand or create your own from scratch? This article explores the pros and cons of franchising and offers insight into a critical decision that could shape your entrepreneurial journey.

Proven Brand vs. Personalisation

For potential business owners, the initial decision often revolves around whether to embrace a proven brand or launch an entirely new one with hopes of it becoming a runaway success. The idea of starting one's own brand is alluring – the prospect of seeing your unique vision come to life, of building a brand from the ground up, and, perhaps, franchising your own success story.

However, caution is needed. Building a brand from scratch is a monumental endeavor. It requires significant time, resources, and a good deal of luck. The truth is that while it's possible for an independent brand to succeed and eventually franchise, the path is long and the probability of this happening is very low.

Pros and Cons of Licensing a Franchise Brand 

Pros:

1.  No Prior Experience Required: With a franchise, no prior experience in the industry is necessary. The franchisor provides the guidance and training needed to run a successful outlet.

2.  Lower Risk of Failure: The risk of failure is significantly reduced in the franchise concept. You're operating under a proven business model with a track record of success.

 

3.  Quick Start: The lead time to starting a franchise business is considerably shorter compared to starting your own brand. This expedites your entry into the market.

 

4.  Training Provided: Franchisors typically offer comprehensive training programs to ensure that franchisees are well-prepared to operate the business.

 

5.  Instant Brand Recognition: Franchisees benefit from immediate brand recognition, saving you the time and effort required to build a brand from scratch.

 

6.  Location Assistance: .The franchise brand often assists in choosing a location, and the design blueprint is typically hassle-free.

 

7.  Staffing and Suppliers: Franchisees often receive support in hiring and training staff and reliable raw material vendors are already vetted.

 

Cons:

 

1.  Limited Control: Franchisees have limited control over the brand, as major decisions are made by the franchise owner or corporate office.

 

2.  Decision-Making Power: Major decisions related to the brand, products, and business operations rest in the hands of the franchise owner, potentially limiting your autonomy.

 

3.  Costs and Fees: Franchise businesses often come with high acquisition costs, including royalty fees, which can affect your overall profitability.

One Point of Caution: FOCO (Franchise Owned Company Operated)

 

Beware of the FOCO model, which stands for Franchise Owned Company Operated. In this format, investors are mostly hands-off and only provide capital for expansion. While it's a popular format, it can be a big red flag for several reasons:

 

1.  ROI Uncertainty: If the probability of a decent return on investment were high, the brand would typically set up its own restaurants rather than relying on franchisees.

 

2.  Owner Involvement: An owner's active involvement in day-to-day operations is often essential to ensure the success and growth of the business