A Franchisee's Warning About Owning A Business

Not Everyone Is Cut Out for Owning a Business or Franchise

This is part of an email sent to me by someone who took the plunge into business ownership as a franchisee.  Seven day weeks and thousands of dollars later the excitement has been replaced by the realization that the American dream has become more difficult than ever to acheive.  

"I'll tell you, it seems that the boss hasn't been eliminated, just changed.  The government, franchisor, the landlord, and all the vendors are who I work for now.  Every agreement is weighted in favor of someone else.  All the rules and regulations forced on us cost money and don't do anything to bring in business.  The franchisor, the government, the landlord, and vendors can change the rules or raise my cost of doing business but if I'm not following those agreements to the letter my franchise agreement can be terminated or we can be closed down or lose access to the products we need to stay open."

 It's a jaded view brought about by an endeavor that hasn't gone well to date for a whole lot of different reasons.  There's enough blame to go around on this one, from the franchisee himself to the franchisor to the vendors to the government.  Unfortunately the franchisee trusted his new business "partner", his franchisor, and didn't protect himself.  The other entities have forgotten that he isn't in business to make them money; he's in business to make money and in the process everyone benefits. 

More from the franchisee: 

"Our customers think we're making a killing.  They always want something for nothing and they'll go somewhere else if they don't get it.  One even told me I needed to do more for the "working families".   The price is where it is because the franchisor and vendors are in bed together; gouging me and splitting the proceeds.  Between the high wholesale prices, the outrageous taxes, and the franchise fee there's very little flexibility on price.  Go down further and risk having no money to live on at the end of the month."

He's also learned that in a service economy that there are plenty of choices so customer perceived value is very important.  His franchisor understands that and pushes discounts and coupons, however, the franchisor always makes sure that the cost of the added value is always coming from the franchisee's pocket. 

"I made a big mistake getting into this. The profits I was told were there aren't and with so much competition margins are very tight.  I miss my job in corporate America where I knew my hard work would be rewarded.  Now I'm facing the prospect of a long-term commitment with no guarantee of success or bankruptcy."

This post isn't to tell people that going into business for yourself will doom you to this kind of ending.  There are too many success stories to think that and the nameless franchisor is in my opinion one of the worst out there.  However, anyone interested in the American Dream should realize that not everyone is cut out for it and that it's not just "someone else" who can fail.