When you want to go into business, franchises offer help in getting started and creating an immediate income. On the other hand, a joint venture with a partner you trust can work better for some types of companies, especially those that utilize novel ideas that haven’t been franchised. Understanding the pitfalls and benefits of each approach can help you choose the working relationship that suits your personality, wallet and ambitions.

Franchise Advantages

When you buy a franchise, the company you buy from provides modern equipment and processes for selling your product or service. In addition, you get instant brand recognition because you use the parent company’s logos, slogans and advertising. With many franchises, you can get advice from experienced experts on everything from staffing levels to quality control procedures and operating hours.

Franchise Disadvantages

You must pay a monthly franchise fee, and this can make it challenging to create income for yourself, especially in the beginning when customers may not have found you yet. In addition, you must follow strict rules set by the company offering the franchise. These rules can be quite detailed, and may cover dress codes, cleaning procedures, quality control measures, and even greetings that customer service personnel can use. Franchises require you to buy supplies from them, and you may not always get the most favorable price because the parent company must cover its expenses for ordering and shipping supplies.

Joint Venture Advantages

A joint venture is an agreement between two companies to try to make money on a business idea. Each partner puts money into the venture and takes on responsibilities he is suited for best. Joint venture partners can exchange ideas and grow the venture as they see fit, relying on each other’s expertise and insights to take the enterprise in new directions. You are not bound by any pre-existing procedures or standards, and you don’t have to buy from a parent company when ordering supplies and equipment. If the venture is successful, you are free to franchise it yourself.

Joint Venture Disadvantages

Because you do not have a tried-and-true company behind you, you may not be able to anticipate significant problems. Where a franchisee can draw on the parent company’s experience, a joint venture partner must be on the lookout for obstacles. If the venture fails, the partners must seek buyers for property and equipment, because there is no franchiser waiting to buy them back. A joint venture can also take longer than a franchise to provide income, because the initial investment may be spent trying to get basic procedures and processes in place, instead of on marketing. A business that is not fully functioning can’t market itself yet.