Franchise VS Startup Comparative Financial Feasibility for a First
Keywords:
franchise, startup, financial feasibility, entrepreneursAbstract
This research provides a comparative assessment of the financial feasibility of franchise and startup business models to guide first-time entrepreneurs in making informed business decisions. The study investigates differences in financial performance, investment requirements, operational risk, and success factors using a mixed-methods approach. Quantitative analysis draws on financial data—NPV, IRR, Profitability Index, and Payback Period—from 20 franchise and 20 startup case studies, while qualitative insights examine entrepreneurial orientation, operational complexity, and risk management. Findings show that franchises generally offer more predictable returns, with IRR ranging from 18–35% and payback periods of 1–3 years, supported by standardized systems and brand recognition. Startups, although requiring lower initial investment, exhibit greater variation in profitability and higher financial risk due to cash flow uncertainty and operational complexity. The study concludes that neither model is universally superior; feasibility depends on the entrepreneur’s risk tolerance, capital capacity, and strategic competencies. It recommends detailed feasibility analysis, stronger support systems, and targeted policy interventions to enhance the financial viability of both franchises and startups.
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References
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