Five Franchise Myths
Myth 1."The franchisor will make you do everything their way. They'll take away all your freedom."
What does that mean, exactly? It would be interesting to call a successful franchisee and ask him or her, "Does your franchisor ever allow you to make a decision on your own?" If you think franchisors make all the decisions for franchisees then you will be surprised by this answer.
Yes, it's true, the franchisor will force franchisees to conform to standard operating procedures. The franchisor may control what you sell, what you say, what you wear, how, when and where you operate the business. It's all part of branding, which is part of marketing, which is what makes money! But franchisors do not take away their franchisees' rights to make all decisions. There are plenty of decisions every day to be made at the franchisee level. Just ask franchisees. Many wish it weren't so--it's often easier to rely on someone else to make the decisions!
Myth 2. "The franchisor charges huge fee so you're just making them rich and not yourself."
Really? Are there no wealthy franchisees anywhere? Yes, you will be required to pay franchise fees. If they're not fair, why do people agree to pay them?
Myth 3. "You can't sell a franchise. You don't own it. Once you buy it, you're stuck with it."
Who comes up with this nonsense? Of course you own it. No, you don't own the brand and you don't own the operating system but you do control certain rights relative to the existence of that franchise, including transfer rights. You will sign a contract that gives you ownership to a license to operate a specific business. Unless your contract says you can't sell it, assign it, or transfer it, you certainly can. And you most likely can make a profit, too! In fact, tens of thousands of franchisees have done so in the last 50 years.
Myth 4. "If you're successful the franchisor will take the business away from you, or they will compete with you."
And franchisors will do that because . . . it makes sense for them to shoot themselves in the foot? Or they like to go to court and defend themselves against lawsuits?
Franchisors and franchisees sign contracts that spell out their legal relationships. Sometimes the relationships are violated. But franchisors that consistently violate franchise contracts don't remain in business very long. You can find them out and avoid them!
Myth 5. "The franchisor will just take your money and run. They won't teach you anything or help you set up a successful business."
Then why would you give them your money in the first place? There's homework to be done before you invest in a franchise. Disclosure laws require franchisors to share information with you before you invest. If you do your homework you can find the right franchise opportunity. If you're in a hurry and you buy a "hot" franchise opportunity, that's the quickest way to get burned. Don't rush your investment decision.
Franchising is not perfect. It is not always successful. Some franchise companies fail. However, when a franchise goes bad, it's usually the fault of the people involved and not the fault of the concept. Franchising works. It's the safest way for people to start a business. It may not be right for you, but don't be fooled by these myths. If you're not going to invest in a franchise, make sure you don't invest for the right reasons.
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By John P. Hayes, Ph.D. John P. Hayes, Ph.D., author and speaker, has written the Franchise Pre-Investment Checklist to help you thoroughly research franchise opportunities. The FPIC makes it easy to understand how to search for and evaluate franchises. Read about this new e-Book, and purchase a downloadable copy now at profitablefranchiseowner.com .
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