Franchise vs Independent

Proven business model, brand recognition, training, and support systems. Lower failure rate (15% vs 60% for independent startups in the first 5 years).

Ongoing royalty fees (typically 5-8% of revenue), limited flexibility, brand dependency, and potentially high initial franchise fees.

Buy a franchise when you want a proven system, established brand recognition, and structured support. Franchise failure rates are 15% over 5 years vs 50% for independent businesses. The trade-off is higher startup costs and less creative freedom.

US franchise fees range from $10K-500K depending on the brand, plus 5-10% of revenue in ongoing royalties, per the IFA Franchise Business Economic Outlook 2025. Independent startups cost 30-50% less upfront but lack brand recognition and systems. Total 5-year cost often evens out when you factor in franchise marketing support.

Ongoing royalty payments reduce margins by 5-10%, you have limited control over products and pricing, territory restrictions may limit growth, and if the franchisor makes poor decisions, all franchisees suffer. Due diligence on existing franchisee satisfaction is essential.

Your experience level (novice = franchise), available capital (franchise needs more upfront), desire for creative control (independent), risk tolerance (franchise is safer), and the specific industry (food and service businesses benefit most from franchising).

US franchise fees range from $10,000 to $500,000 depending on the brand plus 5 to 10% of revenue in ongoing royalties according to the IFA Franchise Business Economic Outlook. Total startup costs including build out and inventory average $150,000 to $400,000 for restaurant franchises and $50,000 to $150,000 for service based franchises. Franchise failure rates are 15% over 5 years compared to 50% for independent businesses.

It evaluates revenue growth tracking, customer acquisition strategy, retention program, product development, market positioning, competitive awareness, team scaling plan, technology stack, process documentation, and goal setting.

It evaluates cash flow forecasting, profit margin tracking, accounts receivable management, tax planning, budget vs actual review, emergency fund, debt management, pricing strategy, financial reporting frequency, and advisor relationships.

When your team is stable, you plan to stay in the same location 7+ years, have capital available, and want to build equity instead of paying rent.

A business is exit-ready when it can be sold at a fair market multiple without the owner being required to stay.

When you have predictable revenue, want to retain full ownership, need a specific amount for a defined purpose, and can comfortably service repayments.