Starting a Business vs Franchise

Explain the differences of establishing a business from scratch and circumstance up a franchise. Evaluate the mastery of franchises in Australia (refer to examples). There ar significant differences between establishing a new business and setting up a franchise. Starting a business from scratch often takes a long time and a large center of capital to accomplish, notwithstanding the rewards can be substantial. A franchise is a business that is clear to trade under a recognised brand name for compensation of a fee (e. g. McDonalds, 7-11, etc). A franchisee purchases the franchise from the franchisor and operates under their name tour paying fees.The factors involved in choosing one of these two options differ substantially and include the amount of risk, cost, operations and reputation. Establishing a new business involves the highest amount of risk payable to the entrepreneur organism solely responsible for everything that occurs in the business. In addition, there is a sign ificant threat of failure for both new business which can result in huge losings for the business possessor. Without a previous business reputation, it may prove demanding for entrepreneurs to secure finance which in effect significantly limits their access to coin to pay for establishment costs.Starting a new business gives the owner greater control over all key decisions and operations, as a result allowing the owner to set up the business exactly how they wish. Establishing a reputation for a new business is a slow influence since a customer base and marketing campaign needs to be developed to generate sufficient sales for the firm. As a result, a new business will experience a slow harvest-time in profits and may not be able to chance upon a high level of profits at the start. Setting up a franchise presents the lowest risk cod to already being established and generally selling widely recognised products.The costs associated in purchasing a franchise vary significantly d epending on a number of factors such as type and size. Due to the general success of a franchise, it is much easier for a franchisee to obtain finance. However, franchisees must pay ongoing costs such as royalties to the franchisor which may lead to a decline in overall profits. Setting up a franchise heavy restricts the owners control over business operations which prevents them from making their own decisions. This is out-of-pocket to the fact that the franchisor has total control over the business operations and in the end determines how the owner runs the franchise.It is also much easier for a franchisee to generate sales due to the widely established reputation of the franchise and the products sold may already be advertised and marketed by the franchisor. Most franchises have been extremely palmy in Australia and have become the fastest bending area of teensy-weensy business in 2004 there were approximately 850 franchise operations in Australia. Franchises such as Glori a Jeans and Jims Mowing have grown tremendously in the gone few years between 1999 and 2004, the number of franchises grew by 25%.This is due to the effective business formula, well-recognised name and established trademarks of franchises which have attracted numerous investors in Australia. Another reason regarding the enormous of franchises in Australia is the fact that most of them unfold comprehensive development and support to franchisees. For example, McDonalds provide franchisees with uniforms, staff training packages, the ingredients and equipment for production and conducts extensive advertising on their behalf. As the success of franchises continues to grow in Australia, it is becoming an attractive option for many potential entrepreneurs in starting a business.