Is Franchising Right For You? 

And are your misperceptions keeping you from a great opportunity?

A lot of people tell us, “I’m just not a franchise kind of guy (or gal)”

Let’s look at why people say that.  First, they confuse franchising and French fries.  The truth is less than 26% of all franchise businesses are food-related.  Those just happen to be the most visible.  And food & beverage is not an easy area to succeed either!  It’s one of the more expensive areas of franchising to get into with the narrowest margins, and has some of the longest hours; perishable product; high employee turnover…there are easier ways to make a living!  But if we eliminate food, there are still 74% of all the franchise opportunities out there to choose from.

Some people believe franchises aren’t capable of growing to meet their income needs.  But we have had clients who have been earning $50,000 and we’ve had clients that had previously been earning $500,000 – and they have all found a place in franchising.

Others believe that franchising is just “buying yourself a job.”  And there are some franchise opportunities that do fit those criteria.  And in today’s economy, if you could buy an opportunity where you could ensure your own ongoing income stream all the way through to retirement and get into the business for a very low investment, would it be a good idea?  For SOME people it’s not a bad idea.

But there is certainly more to franchising than just “buying yourself a job!”  What we hear more often is people wanting to invest and really grow equity.  They ALSO want that ongoing income stream…but the real goal is to build equity and sell it sometime down the road and have that money for retirement.  And franchising offers the opportunity to buy into a successful business model at a relatively low investment compared to buying an existing business and paying for someone else’s growth of the business.  And when you do go to sell the franchise, it may also sell for a higher multiple of income than an independent business (particularly if there is no other franchise territory availability in your market other than for someone to buy an existing one) and you may also find it easier to get bank financing rather than having to provide owner financing — since bank’s know that the franchisor will be there to support the Buyer as well.

Another myth that makes people think franchising is not for them is:  “The franchisor makes all the money”– the truth is…if franchisees weren’t making money, the franchisors wouldn’t stay in business.  There is a rather famous quote that states:  “Franchising is an industry that has made millions of people millions of dollars.”  Of course, you pay a royalty and the franchisor does make money – but if you can make the kind of money YOU want, does it matter that the franchisor is also making money?  You WANT them to be profitable and continue to grow and provide support and build the brand!

The idea that it will take 2-3 years before you can start making money is another misperception we hear.  That is a statistic that is much more applicable to a truly entrepreneurial start-up business than it is to a franchise.  In a truly entrepreneurial start-up, the entrepreneur is frequently so busy reinventing the wheel and developing the systems that even if their business does not fail – which statistically 50% do in the first 5 years and 90% do in the first 10  years – it still can take not only 2-3 years to make money, but frequently is just getting by 5 and 10 years into the business.  In a franchise, because you have the systems from the start, you can ramp up far more quickly…and you can also talk to other franchisees prior to becoming a part of any particular system and determine what the returns and ramp-up time should be before you even start.

And finally, we hear people say that they don’t want to work 24/7 – again…this applies far more to entrepreneurial start-ups than it does a franchise.  When you are given the systems from day 1, you don’t have to work as hard…or as long…because you can work smarter.  And there are many B2B types of franchises that are only open Monday – Friday

So…for all the ideas you may have had…ask yourself…is this what I think or is this what I know?  You may find that franchising holds a great opportunity for you.



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