Deciding to open a franchise is a major personal, financial, and professional commitment. It requires time, capital, and a clear understanding of what you’re stepping into. Like any significant decision, it should be based on facts, planning, and a clear view of your goals.
Franchise ownership can be a viable way to enter business for yourself, but it is not without structure or expectations. You’ll be working within a system, representing an established brand, and following defined processes. This works well for many entrepreneurs, but not all.
Before moving forward, it’s important to consider what franchising involves and whether it suits your personality, resources, and long-term plans. The better you understand what’s required, the more equipped you’ll be to make the right decision.
Why People Choose Franchising
According to the International Franchise Association (IFA), franchising draws in entrepreneurs for several reasons:
Proven growth and stability
Franchises showed consistent growth from 2001 to 2005, increasing by over 41 percent, a steady annual rate of more than 8 percent, outperforming non-franchise businesses. Renewal rates are strong as well: only around 5 to 6 percent of franchise contracts end when renewed, and just 2 to 3 percent are transferred due to retirement or other reasons.
Strong economic impact
Franchise businesses contribute nearly $897 billion in economic output and employ 8.8 million people in the U.S., accounting for over 830,000 establishments across more than 300 industries.
Faster growth than the broader economy
According to the IFA’s 2024–2025 projections, franchise revenue is expected to grow by about 4.4 percent in 2025, with franchise employment increasing by 2.4 percent, outpacing the national gross domestic product (GDP) growth rate of approximately 1.9 percent.
Support, systems, and brand power
Franchisees benefit from established brands, proven operational systems, and ongoing training and support. They also gain purchasing advantages and peer networks.
Is This the Right Fit for You?
Franchising is a popular path to business ownership, but that doesn’t automatically mean it’s right for you. Just because many people choose this route doesn’t guarantee it matches your goals, your working style, or your long-term plans.
Before you commit to anything, take time to assess whether franchise ownership is a good fit for who you are and how you want to run a business. Success in this model depends less on the popularity of the brand and more on whether you’re well suited to operate within a system.
Here are some important areas to consider:
Can you manage the physical and mental demands?
Running a franchise can be time-intensive and stressful, especially in the early months. Long hours, unexpected challenges, and people management are part of the experience. If your schedule, energy, or health are already stretched, adding a new business may not be the right move yet. It’s important to be realistic about what you can commit to both mentally and physically.
Do you prefer structure over full independence?
Franchise businesses come with set rules, processes, and brand standards. Owners are expected to follow them. If you like consistency and clear direction, this may suit you. If you value flexibility or want to build something from the ground up, this model may feel restrictive.
Can you follow established systems day in and day out?
Strong franchises are built on repetition. The ability to follow a formula consistently is part of what makes the model work. If that repetition appeals to you, or if you like refining a known process, that’s a good sign.
Are you comfortable managing people and operations?
Even if the franchisor provides training, you are the one running the location. You will handle hiring, scheduling, customer issues, and daily oversight. If managing a team and solving everyday problems is something you can handle, you’ll be better positioned to succeed.
How do you handle risk and responsibility?
Franchise systems reduce some risks, but they don’t remove them. You are still taking on a business with real financial, legal, and operational responsibilities. Make sure you’re prepared to carry those and work through uncertainty.
Do you have the capital to get started and stay afloat?
Beyond the franchise fee, you’ll need to cover equipment, staffing, marketing, and other opening costs. You’ll also need cash reserves to keep the business running in its early months. Financial readiness is key.
Are you open to coaching and feedback?
Franchisees receive support from the franchisor, but the relationship works best when owners are coachable. If you’re open to following advice and staying aligned with system updates, you’ll get more out of the support provided.
Franchising vs. Starting Your Own Business
Once you understand what franchising involves, it’s worth stepping back to look at the broader decision: should you buy into a franchise system, or start a business from scratch? Both paths lead to business ownership, but the structure, responsibility, and long-term potential are very different. One gives you access to a tested framework with brand recognition and support. The other offers full creative freedom and control, but with fewer safety nets.
Here’s how they compare across key areas:
1. Startup Process
Franchise: You begin with a developed model that has been implemented by other business owners. The franchisor provides a roadmap that includes training, location guidance, and operational setup. The steps from signing to opening are usually standardized.
Startup: You handle everything from the ground up. You define the concept, write the business plan, source vendors, build systems, and test your processes. Each phase is built from experience, research, or trial and error.
2. Brand Recognition
Franchise: You inherit a brand name that likely has regional or national awareness. Customers may already know what to expect. This can help generate early interest and ease some of the early marketing pressure.
Startup: You need to introduce yourself to the market. You build brand identity from nothing, and trust must be earned through consistent service, visibility, and word of mouth.
3. Marketing
Franchise: Marketing materials, advertising plans, and promotional schedules are often created by the franchisor. You may contribute to national or regional marketing funds, and in return receive resources and exposure that support your local operation.
Startup: You create and execute your own marketing strategy. From branding and messaging to choosing platforms and budgets, everything is up to you. Mistakes can be costly, but the learning can also be valuable.
4. Flexibility
Franchise: There are operating rules you must follow. These cover branding, design, services, pricing, uniforms, and more. Changes are rarely permitted without approval.
Startup: You decide how your business looks, what it offers, how you price it, and how you engage with customers. You can shift direction at any time if needed.
5. Support
Franchise: Training, operational tools, and ongoing franchisor support are included. Some brands offer help with hiring, buildout, and compliance. A franchise network also gives you access to peer support from other owners.
Startup: You need to build your own support network. That might mean hiring consultants, joining industry groups, or seeking help from mentors. Any systems and playbooks must be created or sourced on your own.
6. Costs
Franchise: Most require an upfront franchise fee. You’ll also cover equipment, real estate, insurance, inventory, and employee salaries. Royalties and other ongoing fees are common and spelled out in the Franchise Disclosure Document (FDD).
Startup: You have more flexibility with spending, but fewer guardrails. Startup costs vary based on business type and location. Without a model to follow, costs can be harder to estimate and control.
7. Risk
Franchise: You operate under a proven concept. While there is still business risk, the franchisor’s track record and ongoing support reduce the odds of early failure. Performance data from other franchisees can guide expectations.
Startup: Every part of the business model is untested. You face greater risk but also have full ownership of the outcome. Success depends on how well your research, planning, and execution match the needs of the market.
8. Timeline
Franchise: Franchisors often provide a timeline that outlines every stage of the launch process. With clear milestones and support, openings tend to move faster.
Startup: You set the timeline, but it may be slower due to permitting, vendor issues, hiring delays, or planning gaps. Without external pressure, progress depends entirely on your execution.
9. Control and Ownership
Franchise: You own your local business, but not the brand. The franchisor controls major business elements. If you want to sell your unit or make changes, approval is often required.
Startup: You own the business and the brand. You can grow, sell, rebrand, or close on your terms. You carry full responsibility, but also full decision-making authority.
Final Thoughts
The choice between franchising and starting your own business comes down to knowing yourself. What are your goals? What kind of environment do you work best in? What level of structure or flexibility are you comfortable with?
There is no right answer for everyone. Take time to assess where you are, what you’re willing to take on, and what kind of business path aligns with your long-term plans. A thoughtful decision now will serve you better than rushing into something that doesn’t fit.
Sources:
- CNBC’s Behind the Counter – data on franchise growth and renewal rates
https://www.franchise.org/2010/12/cnbcs-behind-the-counter-what-they-left-untold-about-franchising/ - IFA 2024 Economic Outlook – figures for economic output, employment, and growth projections
https://www.franchise.org/franchising-economic-outlook/ - Franchising Overview – reference for systems, support, and brand benefits
https://www.franchise.org/franchising-overview/