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7 Major Difference Between Franchising And Entrepreneurship

franchising and entrepreneurship

Franchising and entrepreneurship are birds of a feather that most times don’t flock together. They are birds of a feather because from a distant point of view they both offer business concepts of products and services.

Going through life with a template can be a springboard to your big breaks and at the same time, can stifle creativity. On the contrary, building from the scratch without a template can be the most frustrating route, figuring and debugging every obstacle can toughen skins, and help when swimming against the tide.

See Also: 100 Profitable business ideas to start now for the aspiring entrepreneur and investor.

Start Your Business in 30 Days Even If You Don't Have An Idea
Start Your Business in 30 Days Even If You Don’t Have An Idea

What Is A Franchise?

Franchises are an already established business, with less risk of failure. This less risk philosophy is usually, what draws people into buying a franchise. A franchise fee, with a great business model, gives you results right away.

The difference between franchising and entrepreneurship lies in the approach of the business models. A closer look reveals the different skill set that is required for both models, as one seems more organic than the other. 

One thing about knowledge is that it helps you in making an informed decision in the business landscape. So whether you’re interested in starting a franchise or not, this article will help you understand much of the process flow in franchising and entrepreneurship.

See Also: How to start a successful wholesale distribution business.

Difference Between Franchising And Entrepreneurship

The following are the seven different ways in which being a franchisee differs from being an entrepreneur.

1.) Benefits And Risks 

Everything in life is a risk, so technically, we go through life trying to mitigate our risk with our endeavors. Who doesn’t want less risk and more benefits? Investors use this – less risk and more benefits, as a yardstick to measure the safest and the best assets class when hedging their bets.

Entrepreneurship on its own very nature is very high risk with respect to its benefit because you don’t have the luxury of a template. However, due to the backup and framework from the support system by the franchiser, most of the risk is taken off the neck of the franchisee. 

In as much as the risk is less with franchising, it’s important that you know that there are risks with running a franchise. Clearly, no business is entirely immune to risk. It will be susceptible to all the same threats as any other business, including recessions, competition, and location (a bad location for your franchise can kill the business).

An entrepreneur bares 100% of the risk in the business. He has to make sure he weighs the pros and the cons before making some strategic decisions. 

See Also: Manufacturing business ideas to start now for aspiring entrepreneurs and investors.

2.) Knowledge And Experiences Gap

Entrepreneurship requires in-depth business knowledge and experience while franchises, on the other hand, do not require in-depth business experience and knowledge.

Most franchises already have a support system and a framework from the backend in terms of running and marketing the business. This means that franchisees need to worry more about management than about their systems and structures. 

But, entrepreneurs typically need an effective strategy and structure to succeed because their operation will depend on the effectiveness of their systems and structures, which they will have to build organically.

Go from idea to starting your business in 30 days
Go from idea to starting your business in 30 days

See Also: How to start a money lending business and succeed.

3.) Stifled Creativity vs Out Of The Box Process 

Choosing to either franchising or entrepreneurship will play a big role in your business outlook. One stifles creativity, while the other forces you to think out of the box. A franchisee plays by the rules.

As a franchisee you are technically a business owner, but, you essentially don’t call the shot, you have a master – your franchisor. He tells you exactly how to run your business and you will sign a contract agreeing to do business the franchise’s way.

Creativity is stifled as you can’t change the brand logo, add new products, or maybe adjust the business due to market realities. And, the franchise may provide you with marketing materials (though you may have some freedom in how you market locally through newspaper ads, events, and social media).

Contrary to the franchise model is the fact that an entrepreneur has what it takes to tweak or adjust a model, culture, philosophy, or even operations, based on market realities. He births new ideas on the ‘how’ of his product.

See Also: Retail business ideas to start now with low investment and make money.

4.) Growth 

A franchise business model has the capacity to outgrow an organic business model – entrepreneurship. The franchisee already has backend support, which is a springboard to business success. 

Franchisees enjoy a plan as some of the legwork has been done for them; they just need to follow the blueprint.

Additionally, a franchisor should have a well-thought-out training model in place, good documentation, great training programs, and a good sales presentation to show buyers that you have these elements in place.

Entrepreneurship, on the other hand, requires your blood, sweat, and tears to experience growth. You literally have to put in the work. It is 100% of your input, no support, and a framework from anywhere. Hence, your growth is directly proportional to your efforts and inputs.

See Also: Educational business ideas to start now for aspiring entrepreneurs and make millions.

5.) Financial Inputs And Requirements

Investing in a franchise gives your financials an exact figure when entering the business landscape. Based on the franchisor, you’ll know how much you’ll need to invest. More so, you’re more likely to obtain a bank loan or a franchise financing program. But, your model has to be in sync with their terms and conditions.

However, an entrepreneur works with a new and unproven business concept – without any framework or support. Funding will be a bit more difficult to access for the entrepreneur.

Often, entrepreneurs are unable to obtain loans due to the risk associated with new businesses and the amount of money that’s required. This means that they have to raise money by themselves either through family and friends, crowdfunding, investors or bootstrap.

6.) Brand Recognition

Franchising and entrepreneurship, like every other business, need a strong brand identity. However, from day one, franchises are always uptight with their brand identity. Brand awareness isn’t a challenge, because that is basically one of the major reasons why they got the franchise. 

Therefore, customers will know about your products which will increase your sales. By buying a franchise, you are actually buying a turnkey business that is ready and waiting for you to start – plug and play model. 

An entrepreneur builds his brand reputation from ground up. He learns the ropes; what works and what does not work. Sometimes, he will make mistakes which can cost his brand.

See Also: How to start a successful logistics business and succeed.

7.) Failure And Success Rate

With the huge head start the franchise model gives a business owner, you’re more likely to succeed than the organic entrepreneur who has to start from scratch. 

The franchise model avails you all the necessary support and framework which is proven and tested. They mostly operate under a common system and they are only responsible for their day to day operations. Also, they get trained about the product line, marketing, how to deal with staff, and other aspects of their daily activities.


Franchising and entrepreneurship have no one cap fit all approach to its business model. It’s important to understand the difference between starting your own business and buying a franchise. 

Weigh the pros and cons properly based on your personality type and preferences. Either one could work for you. More so, paying close attention to the market will work more wonders than you can imagine.

Now that you understand the differentiating factors of both models, which of them do you prefer? Let us know in the comment section below.

Let’s create visibility for your brand today and put your business on the world map. Contact us today to make your brand the preferred choice among our audience of entrepreneurs and business leaders.

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