I’ve had extensive experience with stand-alone startups, AND with franchises. Should you buy a franchise or startup your own ? It depends on two things: First in depends on you, and what kind of business person you are. Secondly it depends on the experience and quality of the franchisor you are considering.
The 2 most important questions to ask a franchisor:
- Can you show me the financial results of any clubs in your system? (note: the longer the history the better but a full year’s results should be an absolute minimum).
- Can I speak with any operators who have been open a full year? Talking to a real business owner with direct experience with a franchisor is invaluable.
If the answer is no to these questions, then you are considering buying into a business system with no track record. It doesn’t mean you won’t be successful, but it does mean you are being asked to pay a significant chunk of money (franchise fees and royalties) without strong evidence of the value.
Advantages and disadvantages of buying a pickleball franchise.
Traditional Franchise Advantages (in any industry)
- Brand recognition: for most franchises (think McDonalds and Subway), there is value in the name. Brands are just beginning to emerge in pickleball.
- Proven business model: If a franchise has a proven business model that has been tested and refined over time it can reduce the risk of failure for franchisees, as they are essentially following a blueprint for success.
- Support from franchisor: Franchisors typically provide franchisees with a variety of support services, such as training, marketing, startup and operational assistance. It is important to understand very specifically what this is and to consider the value.
- High upfront costs: The initial investment required to purchase a franchise can be significant. Franchisees typically have to pay a franchise fee, as well as other miscellaneous costs.
- Less control over business: Franchisees are required to follow the franchisor’s business model, which means they have less control over their business decisions than they would if they were starting their own business.
- Royalty fees: Franchisees typically have to pay ongoing royalty fees to the franchisor. This can significantly reduce profit margins.
Advantages of Starting a Business on Your Own
- More control: In a startup you have complete control over all aspects of the business. This can be appealing to entrepreneurs who want to be their own boss and have the freedom to pursue their own vision.
- Keep all profits: As a business owner, you keep all of the profits that your business generates. This is not the case with franchises, where franchisees have to pay royalty fees to the franchisor.
- Greater potential for reward: If your business is successful, you can potentially earn a significant return on your investment. This is not always the case with franchises, as the franchisor takes a share of the profits.
Disadvantages of Starting a Business on Your Own
- Theoretically higher risk…IF compared to a well established franchise. The current reality in our market is there is no well-established franchise, so I don’t believe the risk is significantly different.
- More work. Either way you do it, starting and running a business will be a lot of work. A good franchisor can save you time on startup, especially real estate and construction if they are experienced in those areas.
- Less support: When you start your own business, you are on your own. There is no franchisor to provide you with training, marketing, or operational assistance. This can be a challenge, especially for entrepreneurs who are new to business ownership. Finding mentors and advisors is important.
Which approach is right for you?
The decision of whether to buy a franchise or start your own business is a highly personal one. If you are looking for a business opportunity with less risk and more support, then buying the right franchise may be a good option for you. However, if you are looking for a business opportunity where you have more control and the potential for greater reward, then starting your own business may be a better choice.
Ultimately, the best way to decide which approach is right for you is to do your research and talk to other entrepreneurs who have experience in both franchises and startups.
Pickleball Business Advisors is brothers Bill and John Pryor. We provide a variety of consulting services based on extensive experience in fitness business development, and research into the fast growing pickleball marketplace. To initiate a feasibility assessment for your pickleball club, or for other consulting, contact us so we can learn about your project.