Buying a Franchise or an Independent Business: Which is right for you?

Buying a business is a significant decision, and an important question to consider is whether to purchase a franchise or an independent business.  

There is no one-size-fits-all answer. Each model involves different costs, risks, obligations and opportunities. The key is to understand exactly what you are buying, undertake appropriate due diligence and make sure the opportunity aligns with your commercial goals and preferred way of operating. In this article, we explore some of the key differences to consider before deciding which model is right for you. 

Ownership, goodwill and your ability to sell

Have you considered the value of building and owning the goodwill in your business, and having the freedom to sell, grow or otherwise deal with that goodwill as you choose? 

When you purchase and operate an independent business, you generally have greater control over the goodwill you build in that business. If the business grows and develops a strong reputation, customer base and brand, that goodwill can become a valuable business asset. Subject to any contractual restrictions that may apply, you also generally have greater freedom to decide when to sell the business, who to sell it to and the terms on which the sale will occur. 

By comparison, a franchisee operates under the franchisor’s brand and for the term of the franchise agreement. A franchisee is not automatically entitled to a further term, and renewal will depend on the terms of the franchise agreement. A franchise agreement may also place restrictions or conditions on the franchisee’s ability to sell or transfer the business.  

These factors can affect the value of a franchised business and should be considered at the outset, particularly if building and eventually selling the business is part of your longer-term strategy. 

Freedom over branding and marketing 

Have you considered whether you would value the support and recognition associated with an established franchised brand? Or, is the freedom to create and control your brand more important to you? 

A key benefit of buying a franchise is there is already an established brand or a brand with goodwill developed by the franchisor. As a franchisee you benefit from that existing brand recognition, tested marketing strategies and advertising conducted across the franchise network. This can reduce the time, cost and uncertainty associated with developing a new brand and building a customer base. 

On the other hand, the franchisor generally controls how its’ brand is used and presented, under a system or marketing plan determined and controlled by the franchisor,.¹

As a franchisee, you are typically required to comply with those branding guidelines covering matters such as signage, store presentation, uniforms, advertising materials, social media and promotional activities. 

You may also be required to contribute to a marketing fund to fund the franchisor’s marketing efforts. Unless the franchise agreement provides otherwise, franchisees usually do not control how money paid into that fund is spent, and payment into a marketing fund does not necessarily mean that the franchisee’s individual business will be promoted using the fund.² 

By comparison, as an independent business owner you would have freedom and creativity to develop and change your own brand, without a franchisor restricting your ability to do so. This provides greater flexibility but also means as the business owner you must bear the cost and responsibility of establishing your brand, developing marketing materials and attracting customers. 

Fees and ongoing payments 

Would you value the greater financial transparency that comes with an established franchise network? Or, are you willing to invest the time and resources in assessing the viability of an independent business? 

When considering a franchise, prospective franchisees are often provided with a significant amount of information about the franchise network. This will include the initial franchise fee and ongoing amounts payable by the franchise for the benefit of the franchise network. This typically includes royalties, marketing or specific purpose fund contributions, technology fees, training fees, renewal fees and other operating charge 

Franchisors are subject to legal disclosure obligations designed to help prospective franchisees make a informed decision about their entry into the franchised network. This will help a franchisee assess items such as their potential return on investment, funding requirements, and the costs of establishing and operating the business.  

By contrast, a person starting a business from scratch is often operating with considerably less information. There is generally no established trading history, operating model or network performance data to rely upon. While market research and financial modelling can assist, much of the business’s future earning capacity will be based on assumptions about customer demand, pricing, operating costs and growth. As a result, there is often greater uncertainty regarding both revenue and profitability. 

That does not mean an independent business is necessarily a higher-risk investment, but it does place greater importance on thorough due diligence, market analysis and careful financial planning. For many business owners, the challenge is balancing the increased freedom and flexibility that comes with owning an independent business against the greater certainty and transparency that can be available within an established franchise network.  

Freedom Over Operating Systems and Processes 

Would you would value being supported by systems and processes established by the franchisor? Or, do you already have ideas about how you would develop and establish these yourself? 

One of the defining features of a franchise is that the franchised business is operated in accordance with a prescribed systems of operating procedures, standards and policies developed by the franchisor. We commonly see standardised accounting and reporting platforms, exclusive supplier arrangements, point-of-sale and inventory management systems, customer service standards and employment policies and processes.  

For many franchisees, this can be a significant advantage. Rather than investing substantial time and resources developing systems from scratch, franchisees have the benefit of a well-tested operational framework.  

However, this established structure can also limit flexibility. A franchisee may feel constrained where they identify opportunities for efficiencies but are unable to implement them because the franchisor is unwilling to approve those changes. An independent business owner has more freedom over how their business is run and can quickly adopt new technologies, modify processes or implement innovative business practices.  

How Burch&Co can help

At Burch&Co, we are experienced in business and franchise acquisitions and understand the practical and legal issues that can arise throughout a transaction. We can help you assess the proposed structure, review and negotiate the relevant transaction documents, identify key risks and guide you through the process from initial due diligence to completion.  

If you are considering buying a franchise or an independent business, please get in touch with our Corporate team to discuss how we can help. 

1. Competition and Consumer (Industry Codes—Franchising) Regulations 2024, section 7(1)(b)-(c).  ↩︎
2. Australian Competition & Consumer Commission, ‘Specific purpose funds for franchise businesses’ (accessed 22 September 2026). ↩︎