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Reasons Not To Buy A Franchise Debunked

Written by: Anne Barr

Article Overview: This article goes over some of the reasons people believe you should not buy a frachise and explains why those reasons are not always justified.

Reasons Not To Buy A Franchise Debunked

1. The franchisor makes all the money
This is a common misconception. Yes, Franchisors do charge an up front franchise fee. Yes, they also charge an ongoing royalty payment. But most of this money is invested in you, your training, and brand awareness nationally and in your market. The franchise fee you pay gives you the right to the Franchisor’s system. They train you in all aspects of their business. The ongoing royalty payments are used for advertising and to keep the brand in the public eye. It is in the best interest of the Franchisor to make sure that Franchisees are profitable and happy. If Franchisees are unhappy, it will be very hard for the Franchisor to sell more franchise territories.

2. Franchise businesses are too expensive
Aside from the initial franchise fee (which provides you with thorough training on all aspects of the business you are buying), franchised businesses cost the same to start as independent businesses. This is where your research comes in. Choose a franchise model that you can afford. They range from a couple thousand dollars up to a half million or more depending on the type of franchise and the industry.

3. I can’t wait 2-3 years to make money
You may not have to wait 2-3 years to make money. Research – Research – Research. When you are deciding which franchise you want to purchase, call existing franchisees…ask them if they are profitable and if so, how long it took them to start making money.

4. I am not interested in auto or food
Great! You don’t have to be interested in auto or food to find a right fit in franchising. There are over 5,000 franchise opportunities in 80 different industries. There are thousands of franchise opportunities that have absolutely nothing to do with auto or food.

5. I don’t want to work 24/7
Again, this comes down to research! You need to thoroughly understand what you are getting into before you purchase a franchise. Ask existing franchisees how many hours they work now and how many hours they worked when they first opened the business. Starting a franchise or any business is hard work. You need to be prepared to work long hours (at least in the beginning) to establish your franchise.

6. The market is already saturated
Do your research! With all the different franchise opportunities available, carefully research which ones you think would be successful in your area. What types of retail or services are missing in the area around you?

7. I don’t want to buy myself a job
Buying a job is usually not the goal of franchise buyers. Sure, you will have to work in the business at least in the beginning. As your business grows and becomes profitable, you can slowly step back and put managers in your place. There are also other opportunities in franchising like Area Developer or Master Franchise opportunities that allow you to build your own local empire of franchisees and create residual income for yourself.

Franchising is a great way to get into business ownership. Confused by all the options out there? That is why you need to utilize the FREE services of a franchise consultant/broker. They can help you with the research and selection process of buying a franchise.

Related Articles
  Why Franchises are Good Investments
  Can a Coffee Franchise Secure Your Future?
  Be Wary of the Passionate Franchise Founder
  Franchising with all its Success
  About 60% of all franchise opportunities have less than 50 units.

Article Tags: buying a franchise, franchise opportunity



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: 10 Reasons Who Startups Fail & Book Recommendations - Great post,but please edit the headline. I presume it is "10 Reasons Why Startups Fail & Book Recommendation


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