Question
My husband and I want to engage in business, but cannot agree how to go about it. He wants us to get a food franchise. On the other hand, I am inclined to start from scratch using my own food recipe (spiced fried chicken, pork barbeque, crepes, and cakes and pastries). Modesty aside, those who have tried my spiced fried chicken say it’s better than Bonchon’s.
How do we break our impasse? What factors should we consider to come up with a final decision?
Since we do not have unlimited resources, one of the first things we want to know is which option comes out cheaper.
Answer
In franchising, you will go into a business and carry a brand that is already known and established in the market, meaning it is based on a concept that has already worked and is still working. The operations of the business have also been manualized and all you have to do is to follow the prescriptions and guidelines faithfully. Frequently, you have to undergo training for this under the wings of the franchisor.
Thus, franchising is a good way for a business newcomer like you to learn the ropes of the business without going through a trial-and-error process. You will also receive constant monitoring and guidance from your franchisor. Thus, you tend to commit less mistakes. You do not also have to build your market from scratch; it is already established.
However, you have to pay for all these advantages upfront in the form of franchising fees, etc. The costs may amount to millions for (big, well known franchises like Jollibee, McDo, Max, etc.) down to around P50,000 for food cart franchises.
Note that there is also very limited room for creativity in a franchise business. Thus, if you are the creative, innovative and independent type who love to experiment and act out of the box, you might find the rules you have to strictly stick to — rules that have been handed down to you by another person (the franchisor) — too constricting and unchallenging.
Which type is more expensive?
The upfront fees in franchising may be high. Still, we can’t say for sure that it is more expensive than putting up your business from scratch. Why? Because start-ups can be very costly, too, in the long run. Building your company and brand reputation will take a long time and usually entails promotion and advertising costs. It will be hits and misses and usually the misses would cost you.
If you choose to start your own business from scratch, having fried chicken better than Bonchon’s is a definite edge, but will not ensure 100 per cent success. Let us say it is a good beginning. It is a beginning that might take you to a future where you will be awarding franchises to others, instead of applying for it. Between now and that future is a lot of hard work and challenges in promoting, marketing, product development, strategizing, customer relations, and providing and maintaining quality service. Do you and your husband feel up to challenges?
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Photo: “McDonald’s Open Doors” by Walter Lim, c/o Flickr. Some Rights Reserved