Everyone who wants to start a business must have prepared their own strategy for their business, including considering choosing a franchise or their own business. Yes, although they look different, the goal of both is the same, namely to make a profit with affordable capital. However, both franchises and own businesses also have their own advantages and disadvantages. Well, in order not to determine the wrong strategy in starting a business, below we will explain a few things about franchises and own businesses. By understanding the differences between the two, you can more easily determine which business is right for you.
Franchise Vs Own Business
When you want to start your own business, you have to build it from scratch. Even so, you can be more free in innovating and experimenting, but the risk level is much higher. Unlike the franchise, which is a form of business cooperation with the principle of partnership. For those who run this business, there is no need to bother thinking about brand reputation, management, or providing equipment considering all of these things have been provided by the business owner (franchisor). In addition, opening your own business is definitely more difficult than a franchise, but you have more freedom in managing the business you run. Meanwhile, when choosing a franchise, you no longer need to introduce your business from scratch.
ALSO READ: 5 Most Promising Non-Food Franchise Business Ideas, Dare to Try?
This is because usually the products offered by the franchise business are well known in the community. Even so, you also have to carefully choose the franchise to run. Don’t get it wrong and actually make you lose money.
Pros & Cons of Franchise Vs Own Business
Franchise businesses and own businesses certainly have their own advantages and disadvantages, both in terms of brand reputation, strategy, business ownership, and profits. Here’s the explanation:
1. Trademark
Franchise Business Brand
By choosing a franchise, you can use the trademark of the franchisor company. So you don’t have to bother thinking about this because everything has been provided. Unfortunately, you cannot change the franchisor’s business concept because there are business standards that have been set and cannot be violated. So it is not suitable for those of you who like to innovate.
Own Business Brand
By building your own business, you have 100 percent rights in everything related to the business. Starting from determining the products to be sold, business targets, business concepts, to how to sell them.
2. Business Strategy
Franchise Business Strategy
The franchise business system has been tested first. So although there will still be a risk of failure, you don’t need to start a business strategy from scratch. What needs to be known is that each franchisee is bound by the franchisor agreement. So that franchisees are not allowed to sell their franchise business to other parties.
Own Business Strategy
By starting your own business, you are entitled to full ownership of the business. If one day the business is no longer profitable, then you are free to sell it. This is because you are the absolute owner of the business, so you are free to do anything with it.
3. Location
Franchise Business Location
In a franchise business, you don’t need to be confused because the franchisor will help you analyze the location that will be used to open a franchise business.
Own Business Location
Any location that is considered profitable can be used as a place of business. There is no requirement to determine the location of the business, depending on the consideration of advantages and disadvantages as a business owner.
4. Supplier
Franchise Business Supplier
Usually the franchisor itself will be the supplier for the entire franchise business. You are not allowed to buy raw materials from other suppliers even if they offer more benefits.
Own Business Supplier
Running your own business means that you can choose any supplier and change them whenever you feel there is a more favorable supplier.
5. Potential Conflict
Franchise Business Conflicts
This business system relies heavily on cooperation agreements and is very sensitive and conflict-prone. If there are imbalances in business practices, the potential for conflict between franchisors and franchisees is very large. It is not uncommon for this conflict to bring great losses to both.
Own Business Conflict
In running your own business, the most important bond is between the company and its target market or suppliers. There are no other ties that have a significant influence on the sustainability of the business. Therefore, an own business has a lower potential for conflict than a franchise business.
6. Training
Franchise Business Training
No need to worry if you are a beginner and have no business experience at all. The franchisor will provide training to each franchisee so that you don’t feel blind in running a business.
Own Business Training
If you run your own business, there is no training. Instead, you have to plan what training you want to give to employees in the company later.
7. Business Popularity & Reputation
Franchise Business Reputation
Franchise products are usually well known to many people, so you don’t have to bother building the reputation and popularity of the product. However, if a problem occurs later and tarnishes the good name of the franchise brand, you will also be affected, even though you have done nothing wrong in the business practices you hold.
Own Business Reputation
Running your own business means you have to introduce and build your reputation from scratch. This is not an easy task and requires a process. The success rate cannot be guaranteed.
8. Promotion
Franchise Business Promotion
In a franchise system, promotion will be carried out together where the franchisor will provide promotional directions to each franchisee, so that the reach will be wider. Promotions carried out by other franchisee outlets will also have a positive impact on your business.
Promotion of Own Business
If you set up your own business, the promotion is only limited to the outlets you have. So if you want to expand the range of promotion, it will require more costs.
9. Advantages
Advantages of Franchise Business
If you want to start a franchise business, there are royalties that must be paid at the beginning of the business. So you have to spend quite a lot just to get the business license. If you don’t have much capital, it will be quite difficult to buy a franchise.
Advantages of Own Business
You are free to decide for yourself how to grow your business for profit. There are no rules restricting you from opening new branches or venturing into new sectors. The only restriction is government regulations. So you can try various ways to multiply your profits.
Cover
Both franchise businesses and own businesses have the same goal, which is to increase the profits of business owners. There are many considerations that must be considered to determine which business system you will run, it all depends on your priorities and choices. However, whatever the business system, make sure you know and pay attention to the legality of the business. If you choose your own business, make sure to take care of business legality such as NIB, company establishment deed, NPWP, and other business licenses for the sake of business credibility and productivity. This will reduce the risk of legal problems in the future.
READ ALSO: Let’s Understand and Take Care of Legal Documents for Franchise Business!
Likewise with a franchise business, you also need to pay attention to legality according to provisions such as STPW and franchise agreements. This can be strong evidence and become the basis for doing things that have been agreed between the franchisor and franchisee. In addition, the legality of the franchise business can also prevent problems from arising in the future because each can know their rights and obligations, and support the smooth running of the business.
KH Contact
Well, for KH Pals who are still confused and confused about choosing the type of business to run, be it a franchise business or their own business, you can just consult with Kontrak Hukum. As a digital legal platform, we have been trusted by thousands of companies and businesses in Indonesia to fulfill their needs, including those related to managing business legality documents and franchise businesses. The services provided include managing your own business license, franchise business license, to making franchise agreements. Complete, affordable, and guaranteed safe so that later you do not experience losses due to lack of understanding and fulfillment of business legality. To view service information as needed, please visit the KH Services – Starting a Business page. If you have other questions, you can also contact us at Ask KH or send a direct message (DM) to Instagram @kontrakhukum.
