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How to Choose Between a Small Franchise or Large Size Franchise

  • Lawrence Ward
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  • May 8, 2018
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Acquiring an existing franchise is a major decision. You must consider whether or not you want to buy into an existing larger business or smaller one. Depending on your managerial style and personal preferences, one model may suit you better than the other. How involved you want to be in daily operations also makes a difference in how you’ll approach selecting a franchise opportunity. Here are some distinct advantages and disadvantages to either model style.

Do you want to a company that operates publicly or privately?

Smaller businesses don’t have to disclose their financials publicly. They aren’t required to report in the same manner as larger because they are traded publicly. Consider whether or not transparency is important to you when considering buying a franchise.

Do you want less bureaucracy or can you navigate it well?

The larger the business you acquire, the more bureaucracy you will have to navigate. Buying a franchise that is smaller means you will have less bureaucracy to contend with in your day-to-day operations. Larger businesses tend to have stronger, leaner processes. Both types have their strong suits. Consider your tolerance level for bureaucracy.

Do you want a personalized ownership experience?

Your larger businesses acquisition has an average revenue threshold above a few hundred million. Your larger business may not know its customers on an interpersonal basis whereas your smaller business will likely have a close relationship with clientele. Your smaller franchise model will likely provide you with an opportunity to know all of your employees in the business.

Consider whether or not you want a hands-on approach to operating your business when buying a franchise.

Do you want to be involved in every layer of decision-making?

Smaller businesses and larger businesses handle decisions differently. A smaller business can act quickly when considering making a large decision that could change the daily operations of their business. Larger businesses are a bit more sluggish in that they have hierarchical structures and bureaucracy that complicates the decision-making processes. When you are preparing to buy a franchise, consider whether or not you want to be intimately involved in every decision-making process. Determine whether or not you want an agile decision-making process when buying an existing franchise.

Do you want to build your customer base on rely on an existing customer base?

A larger business devotes much of their time to catering to their existing customer base. Very little of small business activities are risky because every decision can have a major impact on the business. This is important when considering buying an existing franchise. Larger businesses are more inclined to taking risks because they can better tolerate costly gambles. Smaller businesses have to focus their efforts and resources in a way that best mitigates risks.

Here are some considerations if you are planning to buy a larger or small business. How you want to operate the business and your level of involvement in every aspect of the business largely determines the size of the business that makes most sense for you. Speak with a franchise consultant today to learn which opportunity is best for you.

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