Create The Plan, Work The Plan: A Look At Why The Independent Business Owner Has Trouble Calling A Franchisee A True Entrepreneur

Abstract

Our complex and intricate economic system is comprised of many different types and sizes of businesses, ranging from big corporations to small individually owned entities. The genre of business is and can be profoundly complex. Independence can vary from small single person mom and pops to consortiums of multiple partners, silent partners and limited partners. Currently in the United States there are between 600,000 and 800,000 business start-ups a year. Franchising accounts for a significant number of these start-ups, and as an industry is comprised of 1,500 different corporately owned chains and over 750,000 franchised businesses (Quick Franchise Facts, Franchising Industry Statistics).  Two terms frequently used interchangeably among the American business society are the terms “franchise owner” and “entrepreneur”. There is a popular belief that buying a franchise is an easier route to becoming an entrepreneur than one creating a business on ones own. It is also a common belief that the term “entrepreneur” applies equally to both.  Our paper will thoroughly examine the differences between an independent starting his/her own enterprise vs. franchising, where one can purchase an already detailed and complete business plan. Our paper will detail the different percentages of risks to the owner and discuss how and why buying a “system” has many different nuances and is not truly the same as starting a business independently. We will examine the issue of “corporate fraud” and lack of government oversight in franchising and detail the unequal distribution of income as it relates to both independent start-ups and franchise purchases.  (As a side note, the Spring 2009 Monmouth University Entrepreneurship class has initiated a partnership with “Cartridge World”, an up and coming franchise to open up a retail operation run by the Monmouth University students. It is a true partnership, one in which profits and loses will be shared equally between Monmouth University and Cartridge World. Our research has found that this initiative is the first of its kind between a University and a Franchisor in the country.  The macerations of this partnership will initiate many interesting questions and areas for discussion that will profoundly impact the significance of our paper.)