What are the Differences Between Franchising and Employment?

Looking to transition from employment into the world of business ownership? Discover the key differences between franchising and employment in the UK.

Differences between franchising and employment

What Are The Differences Between Franchising and Employment?

Franchising is a great way to get in to business ownership. If you’re transitioning from employment into business ownership, you’ll be pleased to know that there are many similarities between the two. However, franchising isn’t employment and it is a big step forward, but for most people it is a step in the right direction and one they haven’t looked back from. But what are the differences between franchising and employment? And ultimately, should you consider investing in a franchise? First let’s go over some basics.

What is Franchising?

Franchising is a method of business expansion. It is where the business owner licenses out the business model and rights to trade to a third part, for them to undertake the running of the business in their own area. Franchising is different to other methods of expansion where new territories and units are operated at the company’s expense, or through joint ventures. Whereas with franchising, the franchisee – the third party investing – bares the costs. Whilst this has many benefits towards the franchisor – from increased capital and the ability to scale at a rapid pace with minimal cost – there are many benefits for the franchisee.

Benefits of Franchising for the Franchisee

The main benefits of becoming a franchise owner are:

  • The ability to run a business of your own using a proven business model,
  • Using a brand name that has already been established and will likely be recognised immediately by many of your potential clients,
  • Everything you need to get the business launched is included within the initial franchise investment,
  • And you’ll be your own boss – the main difference between franchising and employment!

Because franchisees are more likely to know their own area better, it is often a preferred for business owners to go down the franchising route. Having the local knowledge of a franchisee is beneficial for both franchisor and franchisee. Having a good understanding of the local area is important in due diligence stages of buying a franchise, because it enables the entrepreneur to identify demand and business ownership viability.

Franchising versus Employment – The Differences

So what are the main differences between franchising and employment? Let’s take a look…

You Are Your Own Boss

Owning a business through franchising is still business ownership. You’ll be able to work your own hours and if viable, run the business on a part time basis. You won’t have anybody to answer to – you’ll be your own boss. However because with a franchise you’re using the brand of the franchisor, you need to make sure that you comply with the franchise agreement and franchise operations manual. The big difference between franchising and solo start up is: you’re using someone else’s brand name and system of operation. You can’t misuse that. The proven business model is to be respected and if you deviate from it, you’ll find yourself in a bad situation.

Achieve Earnings in line with your Ambitions

As your own boss, you can work as hard as you wish. With no limits to your working hours, you can put in as much effort as you want. The more you work, the more you’ll achieve. Whilst some franchises do require full time commitment, many are flexible. Businesses like oven cleaning and luxury massage and therapy franchises are very flexible and enable the franchisee to unlock unlimited earnings. The more clients the franchisee fits into their day, the more they’ll earn. To go beyond the physical limitations of one person, the franchisee may wish to take on staff and multiple vans to further increase earnings. Business ownership enables you to set greater goals than what could be achieved within employment.

Take Satisfaction in What You Do

The concept of working for someone else can be motivationally limiting. Constrained to the fact that your hard work is going into someone else’s pockets, it can be difficult to unlock your full potential. With over 1,000 franchises for sale in the UK, it’s not difficult to find a business that interests you. Maybe you like pets, there are many opportunities to work with animals. Perhaps you enjoy being on the road, there are haulage franchises and courier opportunities out there. And if you do something you love, you’re bound to be successful at it.

You’ll Have More Responsibility

As a business owner, you will bare a lot of responsibility. You’ll need to manage your accounting, finances and taxes (or outsource this), as well as being in full control of a business. You won’t have the safety net of a guaranteed salary – you need to make the business work. But provided you put in the effort, the rewards will be soon to see. Franchising differs from employment because it is your responsibility to make the business a success. The franchisor isn’t an employer, but will still be counting on you to achieve success in your territory.

Although business ownership bares a lot of responsibility, you’ll still have plenty of support beside you. From franchise associations to consultants and of course the franchisor, help is available if you need a bit of guidance.

Should You Consider Investing in a Franchise?

Franchise businesses are a great route to self employment. Unlike jumping into the deep end and going straight for a start up business of your own, franchising gives you space to breathe knowing you have the complicated processes of establishing a business model already achieved. Just the fact of having a wealth of support behind them is a good enough reason for many people. Business start-ups come with a lot of risks, but many of those are eliminated when venturing into franchising. Whilst franchising does come with some risks, they can be mitigated in a number of ways. Some things to consider before investing in a franchise:

  • Is there demand for the product or service you’re interested in selling, in your area?
  • How much competition exists and is the product or service demand already fulfilled? If there is, it shows there is demand for that service. Existing competition isn’t necessarily a bad thing. Because you’ll be entering the market with an established brand name, you’ll have better recognition and reputation garnered by other franchisees elsewhere passed on by word of mouth.
  • Can you raise the required investment and any necessary working capital? Whilst banks can help finance your franchise, you’ll need to raise working capital yourself for ongoing business expenses.

Franchising is a great way to get into business for yourself but not by yourself. With the “business in a box” that is franchising, you bypass many of the risks associated with setting up a business alone. All whilst having the support of those within the franchising sector.

Be Your Own Boss with Franchising

There are over 1,000 opportunities in the UK. With so many businesses franchised, and more establishing all the time, there are plenty of businesses that meet the interests of entrepreneurs. Find out how you can make your interests work for you with a franchise business.

Discover a World of Franchises at Franchise Planet.

Trending Top Franchises

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