Most of the things that people hear on the street about any franchise opportunity are myths. Here we hope to clarify some of the myths about franchising with 13 franchise opportunity myths.
- 1. Bigger is better
The bigger the franchise the better it does is not always the case. There are many franchises that have become very large and have failed. There are plenty of small franchise opportunities that may be better than any large opportunity.
- 2. No freedom
The idea that a business owner will have no freedom to operate within the franchise is a very common myth. While there will be some guidelines that must be adhered to the business owner is still very much in charge of the business. They have the ability to control aspects of the franchise that are not governed by the contract.
- 3. You must have experience in the industry of the franchise opportunity
You do not need experience in the industry that you are going to franchise. Most franchisors provide industry specific training.
- 4. It is easier to open your own business
Opening any business is hard. Whether it is an independent operation or a franchise, getting it off the ground is going to take work. Each method has its own advantages and disadvantages. Franchising offers more of a roadmap than opening an independent operation.
- 5. Franchises are all about fast food and retail
A franchise opportunity does not have to be in fast food or retail. There are franchises available in just about every industry, from car care to fitness. While a lot of restaurants and retail locations may be franchised there are still many other franchise opportunities available for opportunity seekers not interested in those specific areas. It is important to do the right amount of research to find an opportunity in an industry that you will find rewarding. If you absolutely hate retail then a retail franchise is not going to make you happy; find one that will.
- 6. All franchises are expensive
Some franchises have very small initial investments. There are even franchisors that will waive the initial licensing fee and roll it over into the franchise fee, so it becomes even cheaper to start. The thought that you need $200,000 to open a franchise is silly. On average a franchise will cost anywhere between $50,000-$100,000.
- 7. You need 100% of the capital
Again not true. The capital required of each franchise is going to vary. Capital fluctuates within each individual franchise opportunity as well when things like floor plan and construction costs change. Often the franchisor, a bank or the Small Business administration will lend the initial franchise costs. The likelihood that you will need all of the startup capital is very rare.
- 8. The bigger the investment the more likely success
Paying large licensing fees and franchise fees does not guarantee success. The franchisor does provide the formula for business operation that has worked in other locations, but it is still going to take hard work to make the franchise a success. There are many successful franchises that require investments of as little as $3,000.
- 9. The bigger the name the more successful
Just because you have purchased a franchise that has a recognizable name does not mean that you are going to succeed. A name doesn’t grant immediate success. Work will still need to be done to prove the reputation of the brand name. You will still need to generate sales and gain customer loyalty. Bigger is not always better and the fact that you have a recognizable name may just hold you to a higher standard.
10. A franchise will be successful or they couldn’t franchise
This isn’t true there are many franchises that have failed. One of the quickest ways to watch a franchise fail is to believe a majority of the franchising myths. If you open a franchise with the thought that the name of the franchise and the amount of money you spent are a sign of your success you will likely not do the work that will be required to make your franchise successful. The reason franchises are successful is because of the support and additional resources that a franchisee is provided when franchising, not because of their name or cost.
11. The quality of the product determines the success
Remember the pet rock? While the pet rock was not a franchise it was a horribly cheap product that was an absolute phenomenon. In the same area, everyone knows that fast food is not the best source of nutrition. Yet despite large amounts of evidence to say that fast food is a source of obesity and health problems the fast food industry has not suffered. The product does not mean that the franchise will be successful.
12. Limited competition is the key to success
Look at fast food restaurants, most of which are franchised operations. Fast food is an extremely competitive industry and it is also a very successful franchise opportunity. The amount of competition does not indicate the likelihood of success or failure. People enjoy the ability to make a choice. They may choose your franchise if you put in the effort to make it successful.
13. A Franchise will do everything for you
This is where most people make a mistake when choosing to franchise. They assume that because they are paying a franchise fee and they have paid licensing fees that the franchise is going to hold their hand and walk them through the entire operations process. This is false. A franchisor will probably provide the franchisee with training to ensure that they know the processes and systems of the business. Other than that it is up to the franchisee to make sure that the business is successful.
The easiest way to operate a franchise that is successful is to throw out all the ideas you have about how a franchise is going to operate. If you approach running a franchise like you would starting an independent operation then your ability to succeed will be even greater.
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