Buying a franchise has proven to be a good option for many people, but like any other financial decision, there is no one-size-fits-all answer to the question of whether a franchise is right. I? ” Purchasing a franchise involves a significant financial outlay, and owning a franchise often requires an “all-in” lifestyle commitment.if If you are considering whether a franchise business is in your future, follow the FTC Business Blog for our series of articles‘about call Franchise Basics. We’ll explore some of the factors you need to consider when investigating franchise opportunities. Topic One: Debunking Myths and Misconceptions About Being a Franchise Owner.
Myth #1: Becoming a franchisee is like owning your own business. Owning a franchise is not the same as being a business owner. In fact, the franchisor can control many aspects of your business – for example, your site locations, your sales territories, the design of your retail stores, and the products or services you can (and cannot) sell. Of course, the right franchisor may be able to help you with training and expertise, but that help comes at a cost in terms of finances and control.
Myth #2: Buying a franchise will give you the status of being your own boss. After years of earning a paycheck, many would-be entrepreneurs look to franchising as a way to exercise autonomy. Not so fast. A franchise agreement usually gives the franchisor not only overall decision-making authority at the outset, but also some authority over day-to-day operations—how to advertise, what your logo must look like, where to buy supplies, etc. Your motivation for considering franchising is to live a “be your own boss” lifestyle, start by investigating thoroughly.
Myth #3: Liking a company’s products is the best indicator of your success as a franchisee. Successful franchisees often say that it helps to like the product or service, but being a satisfied customer does not guarantee that the franchise is right for you. Some franchises—such as auto repair or tax preparation—require technical expertise or special training. Are the skills you bring a good fit for the franchise? Did your previous work experience provide you with the financial and management knowledge you need to succeed?
Myth #4: Owning a franchise is an excellent source of passive income. Who unlocks the store hours before it opens, turns off the lights at the end of a long day, and handles payroll, customer service, and even routine maintenance in between? Usually a franchisee. Even franchisees who choose to hire a day-to-day manager may find that owning a franchise requires a significant investment of time, energy, and resources. Some people have an image of the franchise as a cruise ship and golf resort, but that doesn’t match reality.
Myth #5: Owning a franchise is a “sound thing” financially. The only sure thing in franchising or any other business model is that there is no such thing as a sure thing. Spending your savings on a national name doesn’t guarantee success. Of course, your skills and commitment will influence factors, but so will many variables beyond your control—demand for your product or service, competition, and local and national economic conditions, to name a few. Additionally, under the franchise agreement, you may have to pay the franchisor even if you lose money.These are just some of the intangibles to consider if you‘Franchising is being considered.
read A Consumer’s Guide to Buying a Franchise learn more.
This is 5 posts Franchise Basics series:
