Common Myths about Operating a Business Franchise
Common Myths about Operating a Business Franchise
Myth: Franchises are a guarantee route to success in the business world.
Fact: The main reason franchises are so successful is because of their rigorous requirements. For instance, most of them require large capital investments. Many of these investments are so substantial that only serious entrepreneurs would even consider signing on. Of those who purchase one of these businesses, not all of them have the assets allowing them to wait for a return on investment. The fact is that it can take a considerable amount of time for franchisees to generate a profit because of the high investment, royalty fees, etc. Thus, undercapitalization is the most frequent cause of franchise failure.
Myth: You can be your own boss.
Fact: While you will enjoy some perks that come with owning a business, you are still subject to the operating system provided by the franchisor. A few examples of this include hours of operation, approved equipment and supplies and even marketing items. What this means to you is that closing early on Christmas Eve may not be an option, unless you are willing to risk getting caught and any accompanying repercussions.
Myth: Buying a franchise is less expensive than starting your own business.
Fact: The initial cost of purchasing a franchise business is typically the same as building one from the ground up. This makes sense when you consider the real estate, equipment and supplies in addition to franchise fees (allowing the use of the brand name, logo, trademark and in some cases, marketing materials). Plus, royalty fees to be deducted from your profits later must also be factored into the equation. Of course, there is no reason to become discouraged. In truth, the key to managing a lucrative franchise is to find the right business opportunity for you, which brings about the next point.
Myth: Higher cost franchises translate to larger returns.
Fact: Rather than searching for the highest investment amounts, you should do your best to find a franchise that will allow you to make use of valuable skills. For example, if you have previous experience in the daycare industry, you should consider some of the children’s franchises in this industry. Though children’s salons are all the rage, your resources, economic and otherwise, will be better spent running a business you already understand. You will see higher profits sooner. Thus, putting your capital in one of the low cost franchises of which you are knowledgeable will prove more profitable than using your resources on one of the high capital franchises you know little about.
Myth: Franchising is a stress-free way to start a business.
Fact: Building a business of any kind can be very stressful at times. While franchises offer terrific benefits such as established name recognition, a working infrastructure and ongoing advertising campaigns, franchisees are not immune from the ups and downs of business ownership. The fact is that these benefits come with specific requirements. Not only are franchisees expected to operate within certain guidelines as mentioned previously, they’re also held accountable for the financial success of their stores. One illustration of this might be a business franchise that experiences a drop in sales over one month. Not only does the owner have to deal with loss of revenue, he or she has to provide an explanation to the franchisor.
Myth: Owning a franchise means you no longer have to deal with employees.
Fact: Developing any business takes not only a monetary investment but also your time and effort. Chances are, you will spend some time, even though it may be very little, making sure things go smoothly at your store. For instance, imagine owning a restaurant franchise. You stop by to visit with your manager about changing coffee suppliers when you notice an unusually full parkinglot. You enter the restaurant to find that all the employees working at their maximum. Drink orders are completely backed up. Since you have a vested interest in making this surplus of customers is happy, it only makes sense for you to jump in and start making drinks. Moreover, if you plan to manage a multi-unit franchise, you will have to hire and develop a quality team of managers in order to achieve success. This would require a great deal of communication and consequently, demand spending time with management employees.
Myth: It’s better to purchase a brand that is already established in my region.
Fact: Going back to the restaurant example, if your goal is to open a profitable fast food chain it may be wise to open one that is already reputable in your community. After all, people know what you offer and that they enjoy it. On the other hand, you have to consider the amount of business the other restaurants are getting. Do they have customers from your territory willing to travel across town to dine there? If so, is the market big enough to share if you build a location in between your designated part of town and the other store(s)?
Myth: You’re always protected from competing franchises in your territory.
Fact: This depends on your contract. If your agreement is strong, you’ll be protected from unwarranted competition, even when it is due to a company merger or a second chain created by your franchisor. Additionally, you should always consider the time frame disclosed for when your territory becomes negotiable. Nonetheless, best way to attain a beneficial agreement between you and your franchisor is to have an attorney review these important documents before you agree to any of their terms.
Myth: The most popular (and lucrative) chains are franchise businesses.
Fact: While studies show that franchises are more financially rewarding overall, not all lucrative chains are franchises. Case in point: Businesses like Starbucks, Lone Star Steakhouse and Kinkos function under a company owned model. This means that the company owns each store but hires managers to run them.
If it Sounds too Good to be True…
With any business, the prospective owner must be prepared to put in a great deal of hard work, time and in many cases, capital. The only real way to guarantee success is to find the business that utilizes the resources already available to you (financial and otherwise). Most of all, it’s good to be optimistic as long as you remain aware of the dedication it takes to run any productive business, even franchises.
Common Myths about Operating a Business Franchise - To learn more about this author, visit Candice Clem's Website.
Like this article? Share it with your friends
As with any business venture, you can not always rely on information passed casually between holes at the golf course. While 95 percent of all franchises are successful, there are several common myths that may set some franchisees up for failure. This happens when an entrepreneur enters the franchise model with high expectations only to be let down by the realities that come with any business. It’s important to be realistic and deliberate in your approach to launching any new company, whether it’s an established brand or built from the ground up. As you weigh the pros and cons of operating a business franchise, do preliminary research and don’t accept what “everyone else” seems to tell you, even some of the franchisors.
Myth: Franchises are a guarantee route to success in the business world.
Fact: The main reason franchises are so successful is because of their rigorous requirements. For instance, most of them require large capital investments. Many of these investments are so substantial that only serious entrepreneurs would even consider signing on. Of those who purchase one of these businesses, not all of them have the assets allowing them to wait for a return on investment. The fact is that it can take a considerable amount of time for franchisees to generate a profit because of the high investment, royalty fees, etc. Thus, undercapitalization is the most frequent cause of franchise failure.
Myth: You can be your own boss.
Fact: While you will enjoy some perks that come with owning a business, you are still subject to the operating system provided by the franchisor. A few examples of this include hours of operation, approved equipment and supplies and even marketing items. What this means to you is that closing early on Christmas Eve may not be an option, unless you are willing to risk getting caught and any accompanying repercussions.
Myth: Buying a franchise is less expensive than starting your own business.
Fact: The initial cost of purchasing a franchise business is typically the same as building one from the ground up. This makes sense when you consider the real estate, equipment and supplies in addition to franchise fees (allowing the use of the brand name, logo, trademark and in some cases, marketing materials). Plus, royalty fees to be deducted from your profits later must also be factored into the equation. Of course, there is no reason to become discouraged. In truth, the key to managing a lucrative franchise is to find the right business opportunity for you, which brings about the next point.
Myth: Higher cost franchises translate to larger returns.
Fact: Rather than searching for the highest investment amounts, you should do your best to find a franchise that will allow you to make use of valuable skills. For example, if you have previous experience in the daycare industry, you should consider some of the children’s franchises in this industry. Though children’s salons are all the rage, your resources, economic and otherwise, will be better spent running a business you already understand. You will see higher profits sooner. Thus, putting your capital in one of the low cost franchises of which you are knowledgeable will prove more profitable than using your resources on one of the high capital franchises you know little about.
Myth: Franchising is a stress-free way to start a business.
Fact: Building a business of any kind can be very stressful at times. While franchises offer terrific benefits such as established name recognition, a working infrastructure and ongoing advertising campaigns, franchisees are not immune from the ups and downs of business ownership. The fact is that these benefits come with specific requirements. Not only are franchisees expected to operate within certain guidelines as mentioned previously, they’re also held accountable for the financial success of their stores. One illustration of this might be a business franchise that experiences a drop in sales over one month. Not only does the owner have to deal with loss of revenue, he or she has to provide an explanation to the franchisor.
Myth: Owning a franchise means you no longer have to deal with employees.
Fact: Developing any business takes not only a monetary investment but also your time and effort. Chances are, you will spend some time, even though it may be very little, making sure things go smoothly at your store. For instance, imagine owning a restaurant franchise. You stop by to visit with your manager about changing coffee suppliers when you notice an unusually full parkinglot. You enter the restaurant to find that all the employees working at their maximum. Drink orders are completely backed up. Since you have a vested interest in making this surplus of customers is happy, it only makes sense for you to jump in and start making drinks. Moreover, if you plan to manage a multi-unit franchise, you will have to hire and develop a quality team of managers in order to achieve success. This would require a great deal of communication and consequently, demand spending time with management employees.
Myth: It’s better to purchase a brand that is already established in my region.
Fact: Going back to the restaurant example, if your goal is to open a profitable fast food chain it may be wise to open one that is already reputable in your community. After all, people know what you offer and that they enjoy it. On the other hand, you have to consider the amount of business the other restaurants are getting. Do they have customers from your territory willing to travel across town to dine there? If so, is the market big enough to share if you build a location in between your designated part of town and the other store(s)?
Myth: You’re always protected from competing franchises in your territory.
Fact: This depends on your contract. If your agreement is strong, you’ll be protected from unwarranted competition, even when it is due to a company merger or a second chain created by your franchisor. Additionally, you should always consider the time frame disclosed for when your territory becomes negotiable. Nonetheless, best way to attain a beneficial agreement between you and your franchisor is to have an attorney review these important documents before you agree to any of their terms.
Myth: The most popular (and lucrative) chains are franchise businesses.
Fact: While studies show that franchises are more financially rewarding overall, not all lucrative chains are franchises. Case in point: Businesses like Starbucks, Lone Star Steakhouse and Kinkos function under a company owned model. This means that the company owns each store but hires managers to run them.
If it Sounds too Good to be True…
With any business, the prospective owner must be prepared to put in a great deal of hard work, time and in many cases, capital. The only real way to guarantee success is to find the business that utilizes the resources already available to you (financial and otherwise). Most of all, it’s good to be optimistic as long as you remain aware of the dedication it takes to run any productive business, even franchises.
Common Myths about Operating a Business Franchise - To learn more about this author, visit Candice Clem's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
|||
Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
|||
John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
|||
Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
|||
David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
|||
Casey GollanCasey Gollan, Business Coaching & Mentoring Programs. Add $1 Million to $10 Million in the next 1 to 3 years. Since 1996 Casey has to added hundreds of millions of dollars to businesses. Watch a free video see client results Business Coaching website. - Visit Casey Gollan's Website |
|||
Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Candice's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
|
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Goal Setting Great Sales Fallacies Feed your body, gain a life Improve Web Site Conversions Success & Happiness |
|
 | ||
 |
Top 50 Franchising Blogs
Top 50 Franchising Blogs | |
 |
Top 50 Diversion Blogs
Top Diversion Blogs of 2009 | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
