Entrepreneur means always being independent business leader to take calculated risk. No matter whatever is his education or experience etc

Depends! Sometimes franchise agreement is the best way to operate business, but sometimes don't. Generally, franchise agreement could reduce risks, but also the profit. On the other side, starting own business means a higher risk, but in that case it is possible to achieve more ambitious profit objectives.

Dear Anjay and Aleksandar,

Thank you very much for sharing your opinions.

Personally, I think that a franchise is a good solution for a beginner entrepreneur, but it certainly does not allow full creativity.

It depends of course. If a novice entrepreneur has a unique business idea, starting an own business is the way to go. For instance if he or she has developed a new product and wants to put it on the market a new business is required. But if he or she is living in an area where there is need for an existing product or service which is not in the area and there is a franchise formula for that product, then franchise is the best way.

Edtya and Rudi are absolutely right. Adding my 2 cents here.

In case of a franchise model, there is a existing framework in place. This means one would have to focus more on the execution mode.

Where as starting afresh, could invite for more abstracts and thoughts. It would be good to have discussions / consultations from some of the Industry seniors to provide guidance and mentoring as and when required.

Thanks,

Raghu

Both cases have no problem, and each case has its advantages and disadvantages

For example, if it starts independently, it may be at risk that it can not be confronted at the beginning of a legitimate financial weakness and experience

If so, he must choose the second option

A novice entrepreneur can always benefit from the hand holding a franchise would offer. But it has to be a good and proven franchise system.

Hi Edyta

I depends. It could not be said franchise is better due to the its less risk. If you have an idea for a new business with enough capital, it will be more profitable...Also franchise agreement so important too. Some of them want you to for for them without any risk for them...

If the dream of an entrepreneur is to start a business activity and do not know how to do it, franchises are proven business models with more certain results and lower risks in the short and medium term.

As a veteran of 3 high tech startups in the San Francisco Bay Area, I can tell you that it depends on the nature of the business you are trying to build. A franchise is buying into an existing business model. It is a ready-made business that depends on your aptitude for execution. The downside is that potential remuneration is lower. It basically is a way to be your own boss and provide for your family, not usually a path to generational wealth. Starting one's own business from idea through business plan to reality is taking a big risk, for a potentially big reward.

For example, many high tech firms begin with a product or service idea, proceeds to a business plan, and initial development of a prototype, usually pursued as a side project while still employed, then seek seed funding only after the product is technically viable. Angel investors are your first stop. With that funding you will be able to hire some staff and build a minimum viable product (MVP). Once you have an MVP, you seek more funding to take it to market, usually from venture capitalists. With this sequence, you limit the risk personally while maintaining as much ownership of the firm as possible.

A note about seeking funding: the most important elements for a business plan are the product, the go to market, and the exit plan for the firm. What they are looking for is the ability to make the exit for the firm according to schedule. The financial plan is not the most important, in fact, everybody knows that it won't survive the first quarter. It just needs to be realistic, but not necessarily accurate. The three startups I worked at exited via stock merger, stock merger, and failure. The first stock merger was an early acquisition at a low valuation. The second stock merger was a late stage acquisition of a company that wasn't going to make it alone at a very low valuation. The failure was a company that died in the chasm (Moore, Crossing the Chasm). It was acquired for the assumption of debt by a competitor. It failed because the investors wouldn't take an offer from IBM for the company at year 5. It is easy to get a company to $30-40M in sales. It is hard to get to $200M. My lesson was learned. Unicorns, private startups valued at a billion USD, are called unicorns for a reason, they are rarer than unicorns. Be realistic about your exit.

depends upon the capacity and guts of the newbie entrepreneur on how he or she perceives risks and opportunities. If the entrepreneur is more of skepticism and pursuit of general benefit, the entrepreneur can opt to choose to enter contract agreements thru selected competitive franchised business but of the entrepreneur can take and absorb calculated risks then he might opt to start and first hand enterprise. Hope it helps

The novice entrepreneur bears the business risk alone while the franchise agreement provides him with the experience of meeting those risks