A growing number of executives and managers are investigating franchise opportunities as an alternative to staying in corporate. They’re turning to franchising because it’s becoming more and more apparent that South Africa’s franchise sector is performing well, and it gives them the opportunity to become their own bosses without the risk of starting up a new business.
If this sounds like you, and you’re wondering whether franchising is the right fit, well the answer depends on you, what you want to achieve in life, and how you feel about factors like risks and rewards. Here are three important points to consider before handing in your resignation letter.
Evaluate yourself and your needs
Both a corporate job and a franchise should provide you with an income. With a job, the income is typically clearly defined;you know what your salary is going to be and how often it’s going to be paid to you.
There may also be non-fixed income (commissions or bonuses, for example) but that’s still usually pretty easy to estimate in advance, so a job provides quite a bit of certainty in relation to income.
With a franchise, especially in the short run, your income is far less certain. It’s quite common in a business start-up to work for some period of time without any fixed income.
Though the long-term income prospects may be quite a bit higher in a franchise, you need to make sure you have adequate reserves to live on while you are going through the initial building phase.
Having ownership in a business is the classic path to creating wealth. When you build a franchise business you’re building an asset that grows in value and can eventually be sold – hopefully for quite a bit of money.
This wealth payoff to the franchise owner is on top of the income received during the operation of the business. Owning a franchise involves taking more risk in the beginning, but the reward is that any wealth created through your efforts will accrue to you rather than to someone else (as it does when you have a job). This factor is important when choosing to go the franchise route.
With a job, your control over your work efforts isn’t very high. You basically have an employer who tells you what they want you to do and how they want you to do it. If you own a franchise, you are the employer who is telling others what you want done, and you are completely in charge of what you do at work.
This fundamental difference is one that is very appealing to some people but uncomfortable or even frightening to others. As you evaluate which option is better for you, this is something to carefully consider to make sure you go in the direction that best suits your personality.
Is a job or a franchise better? There is no right or wrong answer. It depends on your priorities and what you’re trying to accomplish in life.
The basic trade-off is pretty simple: A job has more income certainty, but owning a franchise has more wealth-creation potential and allows for greater control. You need to determine the balance between these factors that works best for you and make your decision from there.