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The Top 4 Problems With Going Into Franchising



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Is it Ethical for a Franchiser to Sell his Concept as a Franchise? - By Sebastien Page

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If you’re trying to understand what a franchise really is, look no further than the most popular international fast food restaurant you can think of. It doesn’t get any easier than that! It would be a dream come true for many people around the world to own and run a fast food franchise like that which serves food to people every hour of the day, all around the globe. However, dreaming is not the best way to make business decisions. You have to really think and think hard about whether opening a franchise business is really worth the trouble for you. Would you really be happy and fulfilled?

So is owning a franchising business, also known as a store front business, something that really lives up to its hype? Or will it be the worst thing that happens to your career?

The earliest problem you’re likely to face is getting the necessary funds. Money is most definitely a difficulty for many.

Say you’d like to become well versed in the business of running a universally recognizable fast food restaurant. For you and people like you to attend Hamburger University, located in Chicago, you’d have to have a net worth of at least one million dollars just to be considered for attendance! Imagine that before you even step foot into the fickle world of the franchising business, you’d already have to be relatively richer than many others. Of course, a traditional business set up isn’t that much cheaper, since you’ll need around a quarter of a million dollars to initiate that. If there’s no way you can come up with this sort of money, best that you not finish reading this article.

Then comes another problem, which is the high risk of failure. Roughly 70 to 80% of all store front operations end in failure after a very short life of no more than 2 to 5 years. Not surprising, if you really think about it , since the average small business entrepreneur doesn’t really start pulling in profits at a regular enough rate as quickly as you’d like to believe.

Next comes the issue of all the hard work and effort required. Since you’re planning on making this business your baby and trying to make it as successful as possible, no ounce of your energy should be spared in doing so. An average work day will normally range between 15-18 hours. Maybe the rewards early on won’t make all that work seem fruitful. So in addition to all this hard work, you’ll have to be patient enough so that you won’t simply throw in the towel a few years down the road and convince yourself that you’re way out of your league in this line of business.

Last but not least are franchise fees. These fees may be the ultimate bane of your existence, since they can significantly cut into your earnings. Consider this in addition to your normal business related expenditure and you’ll realize that maybe you won’t be filling your pockets with as much dough as you had initially imagined.

In the end, you have to understand that thinking a franchising business is the magical solution to all your financial worries is an extremely naive idea, indeed. However, not all hope is lost. Using the necessary tools, training and good sense can help you avoid falling into the disadvantages of franchising and hopefully you’ll be one of those who succeed.


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Free PDF Download
Is it Ethical for a Franchiser to Sell his Concept as a Franchise? - By Sebastien Page

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About the Author: Sebastien Page

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Sebastien Page is Director of Marketing for WorldFranchising.com, the most comprehensive information resource for potential franchise buyers. The company also publishes franchise best sellers such as Bond's Franchise Guide, and Top 100 Franchises Guide. Before joining WorldFranchising.com, Page was Marketing Manager for Franchise.com where he successfully led the Marketing Department. Sebastien Page is very active in the franchise community and he often writes about franchising, sales and marketing.
Click here to visit Sebastien's website.
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Great Article, chock full of info. Great Article, chock full of info.

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