Catering Franchise or Independent Startup

Deciding whether to go with a catering franchise or to start your own independent business can be tough. Your decision will depend on the type of person you are, how independent you want to be, how much start-up capital you have and how much business experience you have. In this article we will examine some of the advantages and disadvantages of starting a catering franchise.

Startup Costs

With a franchise it is likely that your startup costs will be high as you will have to set up everything according to the franchisors specifications. You may have to purchase equipment and other supplies off the franchiser or lease business premises according to their requirements. As a franchisee you will be obligated to pay fees to the head office. Some of these will be due monthly and some may be due at the time that you open for business depending on your contract.

Startup costs for your own independent catering business are likely to be lower. You can keep costs to a minimum by being home based or by buying second hand catering equipment for example.

Risk

With a catering franchise you will have to jump straight into a serious business with a large initial investment. On the other hand, an independent business can allow you to ease into it more slowly. If things don't work out well then you won't be out of pocket with your own business to the extent that you would be with a franchise.

Proven Systems

One of the great advantages of a franchise is that you benefit from the expertise that your franchiser has gained over many years. They have spent years developing a catering business system that has been proven to work well and should be able to be duplicated to work well anywhere. You will gain access to this proven system and most likely receive training in all aspects of managing the business. You will also be part of an advertising and marketing effort that will be organized by the head office of the franchise but paid for out of your fees.

Head office support is helpful to some but it often comes with a heavy price tag. If you have already had industry experience and are prepared to take the time to learn more about business management and marketing then taking the independent road is not all that difficult and can save you money. It is also very easy to observe how franchises operate and to incorporate some of their methods into your own independent business plan.

Branding

Another advantage of buying into a well known franchise is the name recognition that you instantly inherit. Customers will already be familiar with your brand. If you have invested in a popular catering franchise they will be familiar with your products and services and know what to expect. Name recognition generally makes it easier to win customers and can allow you to charge premium prices in the market.

Developing your own catering brand would take time. It is entirely achievable though for those that create a marketable brand and consistently live up to their brands promise.

Future Direction and Growth

A franchise usually makes the startup and early phases of your business experience very easy. However, in the long run many entrepreneurs find that a franchise limits their ability to operate their business as they like. The franchise model can limit your freedom to expand the way that you want to and to take advantage of some opportunities as they come along. Franchisees will also usually have to open all their financial records up to the head office upon request.

Do your Research First 

It is important that you review a franchise agreement carefully before signing up. Make sure that you have clear exit options in the case that things don’t work out as planned. Franchisors have been known to employ tricks in an attempt to try to hide the failure rate of their franchisees. Try to get independent data on failure rates if you want to properly assess the track record of the franchise. Seeking advice from a lawyer before entering into any agreement is advised.

Some franchisees have even found that their franchiser has done things that have negatively affected them such as allowing too many branches of the franchise to open in a small area. The Internet is full of complaints from people whose franchise experience turned sour and cost them money.

Franchising has not been as popular in the catering industry as it has been in other fields. Some business models thrive as a result of the reputation of individual owners rather than franchise reputation. Catering is not a difficult business to learn. While some newcomers would benefit from the franchise model most would do better just to save money on franchise fees and invest these funds into their own independent catering startups instead.