independent or franchise

 

When you decide to become a business owner, the first major decision you’re faced with is whether to be a franchise owner or start your own business from scratch.

There are so many differences between independent business ownership and franchising, and both have their pros and cons. The best choice for you is ultimately going to depend on your personality and long-term business goals.

So what are the main differences between the two, and what should you consider in particular when it comes to a Real Estate agency? Let’s take a look at the pros and cons for each business model.

Franchise ownership

As a franchisee, you’ll have more support than you would as an independent business owner. You have support staff you can talk to who know the business inside out, marketing material all done for you, and procedures, products and advertising all taken care of.

A portion of your business funding will likely be taken care of by the franchisor, and you’ll work in a competition-free zone where franchisees of the same business won’t be able to operate. Lenders are more likely to listen to you, since franchises generally have a higher success rate than independent businesses.

Some Real Estate franchises that are excelling are brands like LJ Hooker, Ray White and Century 21.

However, being a franchisee also means you’ll have less freedom about what you can and can’t do. The systems, the procedures and the ‘brand’ you walk into are all set in place and can’t be easily changed. If you’re an entrepreneur who prefers to blaze their own path, you might do much better as an independent business owner where there are no restrictions.

Independent ownership

Independent business owners have a lot more freedom and choice. Anything goes – it’s your business! You choose where to do business, how to do it, where to distribute, who you want as a customer, when to launch new products, your business name, logo, marketing techniques…the options are endless and the decisions are all yours.

This flexibility is appealing to many business owners because it means you can respond quickly to changes in the marketplace and try different ways of doing business without being restricted to franchise rules.

On the downside, you need to build your brand from the ground up. You’re responsible for meeting your financial and legal obligations, and there are no guarantees that you’ll succeed. You’ll normally have very little support, be up against established competition and won’t know whether your marketing efforts will work or not. You won’t have a reputation and brand awareness to precede you as you would with a franchise, so getting your name out there as a reputable business is a lot harder.

Which is best for you?

The pros and cons for each business model can be argued indefinitely, and there’s no conclusive proof that either choice guarantees success. In the end, it comes down to your personality and business goals. If you prefer the security and benefits of an established organisation, then a franchise is a good choice for you. If you want to have control over all the decisions then an independent business might be better for you.

The choice is yours, and you need to consider your preference, how much business experience you have, the time and capital you have available to invest. Whichever option you choose, running your own business can be an incredibly rewarding and fulfilling experience.

 

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Commission Flow provides leading-edge cash flow support for Australia’s real estate agencies. Through personalised service and flexible commission advance options, real estate agencies enjoy peace of mind and the freedom to grow.

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