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The Top 4 Problems With Going Into Franchising

Written by: Sebastien Page

Article Overview: 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!

The Top 4 Problems With Going Into Franchising

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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Article Tags: attendance, business decisions, business entrepreneur, fast food restaurant, fickle world, food franchise, franchise business, franchising business, globe, hamburger university, high risk, hype, necessary funds, net worth, one million dollars, profits, risk of failure, step foot, traditional business, worth the trouble



Related Forum Posts
Re: Re Franchise etc - [quote="bmueller47":e0j0nu4t]Can you see a shift of various types of franchises? What I am thinking about is that today it is more difficult to create franchises, that has great appeal. More and more people want to have their business, but no interference of someone else.[/quote:e0j0nu4t] Not sure what you mean exactly but it is certain that more and more people want to have their own business but not more and more people know what they really want to do, or how to do it. And that's what franchising is all about. Franchising is not for an entrepreneur. An entrepreneur will do his own thing. People who buy franchises want a turn key business, with a proven model. Franchising in the US had never been that good. I don't have the exact numbers in mind but I know for sure that franchising is growing more and more as people are getting more and more aware of this business model.
Franchising vs. Licensing? - What is your opinion on Franchising vs. Licensing? Which is better?
Nominations for a new Franchising Moderator! - Is there anyone you'd like to nominate as our Franchising Moderator (or volunteers for the position)?
Great Article, chock full of info. - Ian, Thank you for linking your article regarding Licensing vs Franchising. Its a good read.
Re: Hello from Captain Franchise - Hi BuzzAroundBooks, I actually found the site in my search for franchise networking. We're looking to make connections and also inform the general public about franchising. Franchising is often misunderstood because of the lack of knowledge. We're here to help and learn as well! Thanks!


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