When considering whether to start a small business (eg a deli-type, quick food restaurant), how can comparisons across different franchise options (eg Subway, Penn Station, Jimmy John's, etc) be effectively done?
From a cursory glance, they all seem more-or-less identical.
And very little differs from a mom-and-pop sandwich shop (in this example).
Why would someone want to go the franchise route instead of fully owning and running their own version?
There are incentives for taking advantage of a franchise's economy of scale:
Each of these factors can be weighted in one's own individual tolerance for risk, etc... Indeed, one of the nice things about a franchise is that you should be able to get more and better information about the annual expenses of running the franchise, and better market data around expected traffic. In a mom & pop business plan, you will need to secure your own pricing and traffic data. Then, weigh the intangibles (your risk tolerance) against the difference.
Buying into a franchise is assumed to 1) mitigate some risks and 2) provide a more turn-key business option (read: a thick operations manual). It does some other things but in my mind those are the big ones. You pay for those things... sometimes a lot. But it can be worth it in the end.
As someone who made the decision to go the 'mom and pop' route, here's my experience 3 years in. I don't regret it, but there are things I didn't really think about in the beginning. I had a hard time getting over the steep up-front franchise costs and the long-term revenue splits.