The 5 Big Myths of Franchising

If you’re thinking about starting your own business, buying a franchise can be one lucrative option. However, franchises are far from the fail-safe opportunity many people believe them to be. As with any business there is risk and uncertainty, and the “proven” system in place to help you run your franchise may not be all it’s cracked up to be. Read the following article for the lowdown on the top 5 franchising myths.

Myth #1: Franchises Are Safe Investments

Nothing is guaranteed in business, and that includes the success of a franchise, regardless of the efficiency of the system used to run it. Many franchisees go into the business believing this myth, only to find out later that the work is much more difficult than they expected. Well guess what… if you’ve invested $500 000 in a franchise and later decide that it’s going to take more personal motivation than you have to run it, then you’re out a $500 000 investment.

More important however are factors which are out of your control as a franchisee. Is the market for your franchise saturated? Do you have the required skill set to run your franchise? And most importantly, the general state of the economy. Many franchisees, and business owners in general, have recently gone out of business due to the horrible state of the economy. A percentage of these people were new to the industry, and found themselves out of investments in the hundreds of thousands of dollar, within only a few short months.

Myth #2: If a Franchise Has Lots of Locations That Means They’re Profitable

Just because McDonald’s has a ton of restaurants doesn’t mean that if you open your own McDonald’s that you’re guaranteed to be successful. In fact, many franchises go under due to mismanagement, or lack of funds. Sure a brand name will get you recognition, but you’re still competing against all surrounding franchises and businesses. Customers aren’t just going to come pouring in simply because you exist… advertising and hard work will play a big role in your success or failure. Additionally a market may become saturated with your product, or you may not have the exact skill set required to run a particular franchise.

Myth #3: Running a Franchise is Easy

If you’re getting into franchising (or any business venture for that matter) because you’re looking to make easy money or looking to “get rich quick”, stop now and look for a different job. Just because there may be a company system in place to facilitate and organize management doesn’t mean it’s going to be easy. There’s simply no replacement for good, hard work in any business.

Myth #4: Running a Franchise is Cheaper than Running Your Own Business

This may be true for some smaller, cheap franchises, but most large, well-known franchises are in fact quite expensive, and will set you back an investment somewhere in the hundreds of thousands of dollars. The money you’re paying for a franchise is going into the established brand name and business model with a certain track record.

Myth #5: As a Franchisee You’re Your Own Boss

Sure this may be true to some extent… you may have to answer directly to anybody, but the company system that’s in place to facilitate your work is going to put some serious restrictions on your flexibility. You may not have the freedom to set the simplest of things, such as wages, hours of operation, advertising, suppliers (you’re often forced to purchase directly from the franchisor, i.e. no going around looking for a better deal). If you’re looking for the freedom of being your own boss, franchising may not be the place for you.

All of the above is not to say that you’re doomed to failure if you choose to own your own franchise. Franchises do in fact slightly improve your chances of success over running your own business. However, if you’re looking for a free ticket, easy money, or sure-fire success… look again… you won’t find that by buying your own franchise.