Franchise vs. Independent Ownership: Making a Smart Investment

Nailing Your Investment: Franchise vs. Independent Ownership

Starting your own business is an exciting yet nerve-wracking venture for the modern business owner. Entrepreneurs exploring opportunities in the restaurant industry have two options: franchising or independent ownership. While both options have perks, you might wonder which is ultimately better.

Modern business owners should consider investing in a franchise before an independently-owned restaurant. Franchising has numerous benefits that could help you reach your goal of owning a successful restaurant. This article will guide you through why franchising is the better, more successful option for entrepreneurs starting their businesses.

Franchise vs. Independent Restaurants: What’s the Difference?

Knowing the significant differences between these options is crucial when deciding whether to invest in a franchise vs. independent restaurant. Franchise restaurants are corporate establishments with multiple locations worldwide. Organizations like McDonald’s, Pizza Hut, and many other national and international chains are franchise restaurants. Franchise businesses make up an average of 11.4% of all businesses in the United States.

Franchise owners oversee independent locations of the restaurant chain. With a franchise restaurant, you would operate as an individual business owner representing a specific brand with multiple locations. Franchise restaurants are managed by corporate owners rather than being owned by one individual or a small group of people in a community.

Independent restaurants are owned by either one person or a small group of individuals. They typically have one to two locations in a specific radius. An independent restaurant requires the entrepreneur to design and plan everything for themselves. When you own an independent restaurant, you manage the establishment yourself. 

While independent restaurants offer an exciting opportunity for many entrepreneurs, they aren’t the most practical. Unless executed correctly, they can cause significant financial harm to up-and-coming business owners. Independent restaurants are extremely competitive, and as of 2019, there were more than 490,000 independent restaurants in the United States.

Is Franchising the Best Option?

As you move forward on your business venture, you must consider the benefits of investing in a franchise vs. independent restaurant. To help make this decision, consider why franchising restaurants is often considered the better option, as seen below.

Better for Entrepreneurs With Less Restaurant Experience 

While you will ideally have some experience in the food industry, franchises are better for individuals without extensive knowledge or experience operating a restaurant. If you are an entrepreneur interested in the restaurant business without years of experience, you should consider franchising.

Franchises are ideal because they are structured and built on a successful business model to help you navigate the process of running your location. Running a franchise restaurant will be much simpler than opening an independent venture if you have entrepreneurial or corporate experience with little or no restaurant experience.

Additionally, owning a franchise restaurant can benefit you because you will have access to the necessary resources and training materials to help your location thrive. Instead of working your way up through the restaurant industry to become an independent restaurant owner, consider investing in a restaurant franchise.

Franchising Provides More Support

Another reason franchising is a viable option for running your own restaurant business is that you will have extensive support you would not have with an independent restaurant. Whether you need support and guidance in operating a restaurant location or the necessary resources to run a restaurant business successfully, franchising provides resources. They also offer mentorship from other entrepreneurs who have been in a similar spot as you are currently.

Also, because franchise restaurants are already established, you can spend more time building your location rather than struggling to find supportive resources to simplify the restaurant’s operations.

Franchising Restaurants Comes With Fewer Risks

When choosing between investing in a franchise vs. independent restaurant, considering risk factors should be a crucial part of your decision. A franchise ultimately comes with far fewer risks than opening an independent establishment. With independent restaurants, you must create your business model, invest in expensive resources, and rely on yourself for employee hiring and training.

Independent restaurants require a significant financial investment that could cost you financially in the long term. Entrepreneurs with little restaurant experience who decide to entrust their money in an independent location must be prepared to earn consistently high revenue to balance out the investments in the restaurant. Additionally, the independent location means that you are taking a significant risk on the overall success of your business, unlike franchise locations, which have already proven successful.

Franchise locations are ideal because you already have a customer base interested in purchasing from your establishment. Customer loyalty is a non-issue for most franchise owners, making it a valuable investment and one of the best options for entrepreneurs hoping to take part in the restaurant industry. Protecting your finances is crucial when you invest in new business ventures; therefore, franchising restaurants are safer, smarter, and more practical for up-and-coming entrepreneurs.

Franchises Have Better Success Rates

Regardless of your experience in the restaurant industry, franchises ultimately have higher, longer-lasting success rates than independent restaurants. Investing in a franchise rather than an independent restaurant gives you access to customers and an interested audience likely to explore what your establishment offers.

Many independent restaurants are unlikely to stay in business for more than a few years. Up to 90% of independent restaurants close within the first year, and 70% of independent restaurants that do not close in the first-year close in the following three to five years. Even those experienced in the restaurant industry need help to successfully start and maintain an independent restaurant. Investing in a franchise gives you an outline and an understanding of what you need to be successful and can emulate what you find in other franchise locations.

Who Can Help?

Entrepreneurs investing in a franchise restaurant will require help and guidance to navigate this new journey successfully. When considering investing in a franchise vs. independent restaurant, franchising is undoubtedly a wiser choice for entrepreneurs dipping their toes in the restaurant business. However, having expert guidance is still necessary.

Luckily, the professionals at Rib & Chop House can help you get started on franchising ownership as a restaurant business. Rib & Chop House is a restaurant franchise across the United States Midwest that has achieved numerous successes since its founding in 2001 through exceptional service to communities and entrepreneurs looking to partner in a thriving franchise.

Here at Rib & Chop House, we provide an excellent opportunity for entrepreneurs hoping to get involved in the restaurant industry and grow their businesses alongside restaurant professionals who support newcomers. Rib & Chop House will help you invest in a franchise, achieve financial success, and understand the food industry.

Start Your Journey at Rib & Chop House

Getting started with operating a Rib & Chop House location is simple. Find out more about Rib & Chop House today by filling out a franchising form to embark on the journey ahead. It can be a great business opportunity to own a restaurant franchise. It is important to conduct thorough research on potential locations and understand the legal requirements to ensure your venture is successful.

Rib & Chop House provides the perfect opportunity for you to open a steak franchise! Franchises can be successful for long periods of time if you prepare and plan properly! To open your own steak restaurant franchise, contact Rib & Chop House today!