Do you have a dream of becoming an entrepreneur? You’ve reached that point in life where you want your own business. That’s great... you’re taking a step toward having more control over your future. And you’ve considered franchises as one possibility, but you’re ready to dismiss it. From what you’ve heard, they’re a bad idea that usually can’t or don’t work out.
The problem is, what you’ve heard is largely false. A number of misconceptions about franchising exist, and if you accept them at face value, there’s a good chance you’ll be robbing yourself of an opportunity that can not only be financially successful, but personally satisfying. Before you make up your mind, it helps to know the facts:
Myth 1: I’ll Only Become Successful By Finding The Right Business
Many of us equate “right” with what we’re already good at. But that doesn’t mean you need to limit yourself. Define your transferable skills from the corporate world – delegation, people management, marketing, whatever. If you had them in one type of business, you can easily move them to another.
Myth 2: I Can only Be Successful Doing Something I Love
Believe it or not, businesses based on an owner’s background have the highest failure rate. Your franchise business is a vehicle to the lifestyle you’re seeking. If you limit your choices to what you’re familiar with or good at, you’re placing yourself at a major disadvantage, because you’re ignoring a huge number of possibilities that are outside your realm of past business experience.
Myth 3: I’ll Instantly Know The Right Opportunity When I See It
Many people want to fall in love with their business at first sight. That’s an emotional decision, not a career choice. You have to take the time to learn about the details and nuances of the opportunity to understand its potential. You simply can’t do that when you make a determination based on just what you feel today.
Myth 4: I Can’t Be In A Business I Know Nothing About
Of course you can. It’s instinctively natural to want to remain in our comfort zone and stick to areas we have experience in. But as a franchise owner, your business is running and growing your business, no matter what it is. Remember, you have transferable skills. That’s your strength. You can hire people who know the details. Your road to success is buying into and learning the system, which is already a positive working model, then using your talents to make it grow.
Myth 5: There’s No Freedom In A Franchise. Corporate Dictates Everything.
This is one of the most pervasive beliefs. In fact, there’s tons of room for individuality. The franchisor “dictates” only one thing: the basic system; the framework, if you will, that’s already proved successful. Beyond that, you’re in charge. You’re managing your business. You decide whom to hire and fire, how to market your location and how to promote it regionally. Keep in mind that the franchisor wants you to succeed, because if you don’t, it doesn’t. It’s not a complex relationship, but one of the clearest examples of those win-win situations you’re always hearing about.
Myth 6: Franchises Stifle Creativity
Again, this is patently untrue. The only limitations you have are, once again, those that have already been proven to generate income. This might include signage, uniforms, formulas, protocol, and so on – the basics that allow you to represent the brand and your own location as professionally as possible. But it’s completely up to your imagination to think up new ideas and make suggestions to corporate. In fact, most franchise parent companies encourage suggestions, because it’s where many of them get their best ideas. McDonald’s corporate, for example, didn’t come up with the inspiration to start selling breakfast. The concept of the Egg McMuffin was developed by a franchisee.
Myth 7: I Can’t Afford A Franchise
Sure you can, if you look at it for what it is: an investment in your future. Most franchises can be established for well under $100,000, and some can be set in motion for as little as $12,000. Your only expenses to the parent firm are a one-time franchise fee and weekly or monthly royalties, which are usually determined on a case-by-case basis. Beyond that, your out-of-pocket expenses are the same as they’d be for any business – salaries, local advertising, etc. The difference is you have the support and training of the franchisor network, which will also help you ramp up to full speed far more quickly that you could on your own.
Myth 8: I’ll Have to Quit My Job to Become A Franchisee
Many franchise concepts are specifically designed for people who are working other jobs. In fact, approximately 70% of all franchise owners are passive rather than full-time investors.
Can franchises still fail? Sure they can. But the vast majority of the time, over 95%, this is due to the owner deciding to deviate from the system and attempting to cut corners by using inferior materials or altering formulas. The key to making it as a franchise is consistency. If you don’t adhere to the groundwork, which, once again, is in place because it works, your chances of success will drop dramatically. You want to leave the habits from the corporate world where they are, and bring along your marketable and transferable abilities.
All told, there are over 760,000 franchised business in the country, which account for over 18 million jobs nationwide, or one out of every seven in the private sector. They produce $1.53 trillion (yes, trillion with a “t”) in total economic output and represent $506.6 billion in private-sector salaries. Those are figures it’s tough to argue with. Perhaps it’s time to stake your claim.
Education Is Everything
Once you select a franchise investment opportunity for yourself, your education is provided. But what about the decision itself? Even though there are thousands of franchisors to choose from, they can all be rendered down to about 70 different industries.
Not a huge number, but it can still be a bit daunting. How do you research them, and more importantly, how do you choose one?
First, get some basic information from organizations like the International Franchise Association (www.franchise.org). It will also put you in touch with professionals who can offer support, answer questions and provide leads.
Next, consider using a franchise coach from an organization called The Entrepreneurs’ Source. With a 23-year history in franchise placement, they’re specially trained to take you through a discovery process to help you define your lifestyle, goals and dreams. When you’ve identified what you want your lifestyle to look like, it will be easier to pick the right business concept to support that lifestyle.
Once you’ve narrowed down your choices, take the time to contact current and former franchisees to pick their brains. Most are happy to help. You’ll quickly pick up tips about what to do and, more importantly, what not to do.
Finally, don’t just skim the major points of the Uniform Franchise Offering Circular (UFOC) of the franchise you’re thinking about. Read it carefully and completely. It’s a legal document, and offers a wealth of information.
