Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!
Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!
Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!

Why Entrepreneurs Tend To Ignore Franchising, And Why That Needs to Change

Mention franchising in a conversation and one thing immediately comes to mind: Fast food.

However, this only tells a sliver of the story. Home services, senior care, educational services, auto services, and massage & chiropractic businesses are all booming franchise opportunities.

But why don’t enough entrepreneurs know about these diverse franchise opportunities? And how can the industry change its mainstream perception?

So glad you asked. Let’s dig into issues around perception, generations and career paths. We’ll explore why entrepreneurs tend to ignore franchising, why that needs to change, and several solutions on how to do so.

The Problem of Perception

The franchising industry was largely fragmented with a lack of big time big name investors in the past. There has been a shift lately because private equity firms have seen the venture capital like returns that franchising can provide. so investors are leading the way for that interest to drastically change in the next ten to twenty years.

We believe the industry can raise awareness around a new perception in two ways. The first lies in the nature of the franchising model itself. See, a franchise is the successful replication of a business, over and over in new locations. As more customers saw Massage Envy stores popping up all over the country, they realized Massage Envy was a franchise.

The second way to raise awareness is through savvier investors getting involved which elevates the perception and exposure for new businesses. We wrote about this extensively in our previous series, Franchising & Private Equity Firm.

The Solution of Younger Generations

Franchising may have fallen out of favor for a certain segment of entrepreneurs, but our data show that 2021 is setting up to be a record year for new franchise sales. While baby boomers’ interest has declined over the past several years, millennial interest has seen a small but steady increase as they acquire wealth.

That will only increase over the next decade, so franchise brands need to make plans today to earn their way into those people’s minds and hearts. There’s nothing short term about this industry. You’re in it for the long game.

We strongly recommend higher education professionals create business courses at universities about franchises. These hardly exist if at all on campuses, and it would offer an alternative to standard business curriculum, while also crossing over into entrepreneurial territory. This would give fresh out of college students a huge edge when entering the workforce, and become a strong recruiting funnel for franchise organizations to tap into and develop profitable relationships with schools.

Provide Alternate Career Paths

Another way to appeal to a younger generation is to circumvent college altogether. Franchising is an alternate path to a meaningful career than through college education. For the $100k you spend on a four year degree (including tuition and living costs), you could buy a franchise, which comes with professional training/education, and probably make a return on that investment much quicker than an education.

Remember when billionaire investor and entrepreneur Peter Thiel launched a fellowship where teens were awarded $100,000 over two years to launch their business ideas, but must drop out of college? Franchising could do the same.

In fact, many of our younger clients in franchising are sending their leads a text from them within sixty seconds of filling out a form on their website. They are ahead of the game in a historically sleepy industry. Read more about their successes on our FranFunnel Bulletin.

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Still ignoring franchising as an entrepreneurial path?

It’s harder than it used to be to avoid, as the successes are now well documented. And most of them go beyond fast food.

We hope these insights, data points and ideas inspire you to consider becoming a franchisee as the best career option you could make.

Take our industry recognized franchise quiz that over 1,000,000 entrepreneurs take every year to find the right opportunity for them.

Why Franchisors Don’t Like Negotiating

The first impression that the franchisee gets from reading the franchise agreement is total incomprehension, unless they are well versed in legal terminologies and phrasing. The FDD is required to be in plain English but the franchise agreement has no such requirement. Typically, the franchisor’s legal department works extremely hard to secure the franchisor’s position through the Agreement and makes it impenetrable for someone who is not a lawyer to understand. The uniform nature of the agreement for all franchisees makes it assumed that the franchisee must sign the agreement so that all the franchisees follow the same terms. Even though that is partially true, the franchisee can plead their case and negotiate terms where they believe that they are offering something unique to the franchisor.

10 Business Opportunities for Under $25K

Here’s just a snapshot of a few of those options that are available.

Franchisee Insight: Learning from Franchisor Litigation (or Lack Thereof)

The Item 3 disclosure requirements are complex compared to other items of the FDD, but they can generally be summarized as follows. In Item 3, franchisors must disclose: