What is the difference between a franchisee and a company owned store within a franchise chain? Why might one prefer to be the franchisee or the manager of a company owned store?
The main difference between a franchisee and a company owned store within a franchise chain is that the franchisee is the entrepreneur of the location, he/she can run it as he/she pleases always keeping in mind that there are still certain rules and policies to abide by according to the franchisors liking. The company owned store within a franchise chain is simply what it states, a store location that is owned by the franchisee. There isn’t a right or wrong answer to which one should you choose. It all depends on what type of personality trait you have and what responsibilities and freedom do you prefer. If you want to be a free bird, make your own decisions, be your own boss and make some changes according to your liking that you want to be a franchisee. Becoming a franchisee does come with cost. You have to take into consideration that you will require start up capital in order to own your own store with the rights of renting the name and products from an existing franchise. You have a lot more of a responsibility that would a manager at one of your locations. If you are an entrepreneur at heart, want to take on the challenge of becoming a franchisee than you want to go that route. It wont be an easy peasy road, be prepared to run into a lot of headaches, problems, challenges, and expenses, however the pay out and return are much greater to those obstacles mentioned, if you are prepared with the right tools and experience.
The manager at the company owned franchise is what it states, a manager. You will be running the store location on behalf of the franchisee and your responsibilities are less than what the franchisee has to deal with. You don’t have to invest any money in order to become the manager, however you still have to manage the company employees and most of the time has to account for the finances of the location. You have many times the responsibilities of having a profitable location, because if your store isn’t profitable, you won’t have a job. Managers have to be ready to face the day-to-day problems and challenges, such as upset customers, employee training, customer service, time management and a lot more duties. Think about which category you fall right into and that would be the option for you. Of course always keep in mind that both come with very different challenges and rewards, however at the end of the day you have to be ready and happy in whichever role you choose. Your health and happiness is the most important part to carry either role successfully.
What is typically provided by a franchisor to its franchisees? Why would these be valuable to a nascent entrepreneur? Why is the failure rate lower for franchisees than it is for independent businesses?
Typically, Franchisees receive the material (food, ingredients, supplies, etc..) at a reduced cost. It is the franchisees responsibility to budget what they will need in order to run a successful branch/store/location. The franchisee needs to be prepared to follow policies and procedures, and has to have had some experience in the industry they are looking into franchising the name in order to be the most successful possible. What the franchisee gets in return of their investment in the company is the established name and brand that the original founders have already established and took the hardest part of starting a successful business out of the equation for the franchisee. You need to not worry about the brand recognition because it has already been established. The failure rate for a franchisee is lower than any independent business, because it has already established the name and recognition and whenever someone is in need of that particular product or service than they come to your store because of the already established name and brand. Where as for a start up, it has to work harder to build customer loyalty and brand recognition, thus proving that if you want to run the show and start a movement/brand you need to put in the work and proactively come up with innovative ways to promote your company image. Becoming a start up isn’t a easy position to be in, neither is running a franchise, however start up comes with more labor and hours of brainstorming how to penetrate the market with your product/service.