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While entrepreneurship and franchising share many aspects and facets, they are two totally different business concepts. Here are some differences between the entrepreneur model and the franchising model:

Entrepreneur Model

One of the biggest differences between entrepreneurship and franchising is that entrepreneurs create the business structure and concept. The appeal of becoming an entrepreneur is that a person can become their own boss.

Entrepreneurs make all of the decisions and frameworks for their business. Typically, they have some type of training via college courses or from a family business or family member who is an entrepreneur.

When money is needed to start up their business, entrepreneurs are in charge of finding a source for that funding, whether it’s through crowdfunding, investors, a small business loan or a bank loan.

One of the greatest appeals of being an entrepreneur is that when they make a profit, they don’t have to worry about paying any fees, which is opposite of a person who is involved in franchising.

Franchise Model

While the franchising model has similar characteristics to the entrepreneurial model, franchising will involve more structure and multiple locations. It’s a business model that’s already been tested.

A franchisee must adhere to the principles and rules that are tied to the franchise that they are operating. A franchisee will receive extensive training so that they learn all of the aspects that surround their franchise business. This is a major difference from an entrepreneur’s business.

Of course, that training and support come with a cost. Franchisees will pay royalties on profits that they make as well as a license fee that allows them to run the franchise.

Entrepreneur Versus Franchisee

A major benefit of operating a franchise is that a person is able to step into a business that has been tested and produces results. The negative aspect of this is that they will have to pay fees and a portion of their profits. While this may be less profitable, it does provide more stability.

An entrepreneur must create and find the concept and funding for their business. The positive element of this model is that a person can end up hitting a home run and make a large number of profits if their concept is a huge winner. All of the profits that they make can be pushed back into the company for growth or used as salaries.