5 Common Myths and Realities of Franchising


The franchising model provides a springboard to many would-be entrepreneurs who dream of owning their business; but do not have experience or time needed to take care of myriad aspects of running a small business.
While franchising does provide the needed support and tools for running the business; many people wrongly believe that because they are going in the franchising business they can operate the business without much effort on their part. After all, the franchise is supposed to take care of everything in exchange for getting the monthly royalty payments, right? Nothing could be further from truth.
In this post, we aim to dispel this and other myths held by entrepreneurs. You should also look at previous blog posts that discuss qualities to look for in a good franchise as well as signs that show the franchise will be successful.

  1. Myth The chances of losing money in the franchise business is virtually zero. After all, the business model has already been proven by the franchise.
    Reality – There is a large gap between having a proven business model and making money from it. The gap results from how the business is operated and this is where most business owners get into trouble. They think that just by borrowing proven formula from the franchise they can make money without much effort. If you are one of them you need to look at the number of Subway franchisees that have gone out of business in spite of tremendous success the Subway franchise has enjoyed in the last 10 years.
    The success or failure of your business is determined to a large extent by how the business is operated. A good franchise certainly makes it easier for you; but, at the end of the day, you are the master of your destiny.
  2. Myth I don’t need to worry about most aspects of running the business. The franchise will take care of them for me.
    Reality – The opposite is probably true of owning a franchise business. While the franchise will help you in terms of streamlined processes and marketing they do have strict requirements that every franchisee is expected to follow – whether they like it or not. Besides, franchisor will only show you HOW to run various aspects of your business. It is entirely up to the franchisee to MAKE THINGS WORK.
  3. Myth I will have freedom to run my business the way I want as long as I pay royalty to the franchise.
    Reality – Owning a franchise business comes with many strings attached. There are number of rules and policies prescribing how the franchisees need to operate the business. The franchise will dictate all aspects of operating the business ranging from how the building should be setup and decorated, what products to use, what price to sell it at and so on.
    If you are not prepared to follow the rules and procedures you should think hard about getting into franchise and pursue independent business instead.
  4. Myth I don’t need to worry about marketing my business. The franchise is going to take care of all marketing in exchange for the royalty and ad fund contributions I make.
    Reality – Most franchises require the franchisees to pay towards marketing and advertising fund that is used for common advertising that benefits all franchisees. While this certainly helps build brand awareness for your franchise in the community you operate in; it is not sufficient to market YOUR business to YOUR customers. You need to augment the franchise marketing with unique marketing and advertising tactics that are tailored for your customers. In an earlier post we showed how you can increase community involvement to improve sales for your business. Also, keep in mind these fundamental rules of marketing while you are thinking about approaches for local marketing.
  5. Myth The area / territory supervisors do not have a lot of say in how my business is run. The franchise is the one who dictates all the rules and policies.
    Reality – While the corporate franchise sets the policies and procedures for all franchisees to operate; the area supervisors and inspectors ensure that they are followed by franchisees. Getting on the wrong side of these people can cost you a lot in terms of money and hassle. We have come across several franchisees that went through lot of hassle and even loss of franchise rights when they could not get along with the area supervisor. On the flip side, having good relations with area supervisor will give you freedom and additional support from the franchise.

What other myths do you think are out there in terms of franchising?

Image Courtesy:   tiffanyday

Trackbacks

  1. […] This post was mentioned on Twitter by Angel Biz Advisors. Angel Biz Advisors said: NEW BLOG POST: 5 Common Myths and Realities of franchising in #smallbusiness – http://ow.ly/3AHnO […]