Franchise Articles

Posted on Jan 05, 2011

Debunking Franchise Myths

We all know the upside to franchising: proven franchise system, training and support, purchasing power, brand recognition, and lower risk of failure top the list. But before you utter those three little words, "it's all good," take a reality check. Consider this list of common myths surrounding franchising and get the true facts.

Myth: Success is guaranteed.
Fact: Franchising does increase your chances for success over going it alone, but it's not a magic solution. Any venture involves risks; a proven system merely lowers those risks.

Myth: You can be your own boss.
Fact: Yes, you will enjoy some perks as a business owner, but you still have to follow someone else's rules-the franchisor's. You may not have the power to make even the most basic decisions about hours of operation, pricing, suppliers, and marketing.

Myth: It's cheaper than starting from scratch.

Fact: The cost of starting a franchise is about the same as starting your own business when you consider the real estate, build-out, equipment, supplies, and advertising. You might get some price breaks from group purchasing, but royalty fees will offset any savings.

Myth: It's easy.
Fact: Don't assume that once you make your investment it's not going to be as hard as a regular non-franchise business. With a franchise it's going to be an easier transition and a lower chance of failure, but there's no way around it-running a business is hard work.

Myth: Bigger is better.
Fact: Bigger companies do offer some advantages like large-scale advertising, sophisticated systems, and more capital to support the brand. But smaller franchisers are often more flexible and responsive to franchisees.

Myth: A high-priced franchise will yield a bigger ROI.
Fact: Often the opposite is true. The price of the franchise has little to do with profit potential. You need to take into account numerous factors such as market conditions, system efficiency, location, and your own knowledge of the industry.

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