Difference between Franchise and Business Opportunity

difference between franchise and business opportunity

A Franchise or a Business: Which is the Best Fit for You?

If you’ve ever browsed through your local classifieds, you’ve likely seen listings to purchase a franchise opportunity or a business. While the two may seem mutually exclusive, they’re not. There are distinctions between the two that not only set them apart by definition, but also indicate substantial differences in operation tasks, business size, and decision making.

What is a Franchise Opportunity?

buying and managing a franchise opportunity

Many fast food restaurants that you see are part of a franchise. Take Subway, for example. To become a franchise owner, you must pay an upfront franchise fee to purchase the rights to purchase and resell Subway products and reproduce Subway recipes. Subway is a profitable company and already has an existing market and consumer following. There is really no option to reinvent the wheel. You’re given access to regularly updated marketing material and brand specific items that take most of the decision making out of ordering stock and planning. This is now your business and you are responsible for its success. There may be a recurring franchise fee that is paid at a specific interval. If a recurring franchise fee is required and the fee is not paid as required, you may lose the right to continue distributing the brand’s products.

What is a Business Opportunity?

purchasing an established business towards your career

A business opportunity is less cut and dry. You’re responsible for much more of the decision making regarding your product, the day to day business tasks, and the marketing strategies for the business. Purchasing a business opportunity typically means that you’re purchasing a business that someone created and matured themselves. This could be a small-business grocery store, auto repair shop, retail shop, or similar. You’re responsible for locating and purchasing your own product as well as marketing your products to produce revenue. There is more room for creativity here and you’re able to shape your business with your own ideas and opinions.

Side-by-Side Comparison

In both opportunities, you’re responsible for recruiting and hiring your own staff. An employee handbook should be provided to all employees in both types of organization. However, the employee handbook for a franchise should emphasize that employees must agree to comply with brand-specific requirements such as uniforms, procedures, and recipes, where applicable. This is often provided as part of the purchase of the franchise. The same may be true of a regular business. However, you have more discretion regarding what to require in the handbook. Guidelines that are specific to your region are one example of where your input is essential.

The Best Choice for You

It is essential to consider the amount of effort and time you have available to commit to your new venture. If this establishment will not have your full attention, then a franchise may be a better option for you as you’re already purchasing an established brand. If you have unlimited time and effort to devote, a business may be your best option as it requires more fine-tuning and attention.