Making the leap from working for somebody else to deciding to invest in your own franchise is a huge decision that comes with multiple considerations… and potential consequences. At risk is your weekly paycheck, your daily routine, and giving up the sense of ‘security’ you enjoyed when someone else made all the big decisions and paid the bills.
On top of all that, there are all those ‘friends’ telling you why you shouldn’t do it. Co-workers, family and perhaps even your spouse will give you dozens of reasons – mainly myths and misconceptions – that could potentially stop you from following your dream to own your own business through franchising.
The reality is that there are tremendous rewards to be realised in franchising – if you find the right opportunity at the right investment with the right concept. You also have to go into it with the right mindset and be fully educated about the pros and cons. Sometimes, it’s hard to know what to believe with all the people whispering in your ear and all the ‘information’ – true or not – that you find on the internet.
Here are some of the most common misconceptions about franchising, along with a bit of wisdom and some real truths, to deflate each myth and provide you with real-life perspective.
MYTH 1:
You have to have experience of running a business in order to become a franchisee.
The very concept of running a franchise is about following proven systems and processes and being trained to execute them. In fact, some of the most successful franchise owners I’ve known over the years, both within our own franchise system and others, are people who had no previous business ownership experience. Some came from the corporate world or the military. Others were former teachers, car salespeople or accountants. Their common qualities include the ability to communicate well with others, make swift decisions when necessary and follow the systems that are provided to set them up to succeed.
MYTH 2:
The cost of entry is too expensive.
Although it’s true that some franchises can cost upwards of $1M to get up and running, many options are available that you can start for $100,000 or less. The point of entry depends on a variety of factors, including the industry, business model, and the cost structure specified in the Franchise Disclosure Document (FDD) (the agreement between you, the franchisee, and the franchisor).
Remember, you are not just ‘buying’ a franchise, you are actually making an investment–an investment, essentially, in yourself. Before you get entangled in all the reasons you can’t afford it, explore financing options available, including, family members and small business loans. Financial requirements will also vary depending upon whether the franchise is home based or brick and mortar, if you are building a territory (Area Developer), or running an entire country (Master Franchise). Typically, when you are looking at operating multiple units or becoming a master franchise, the investment goes exponentially up, as well as the expertise you are going to need to demonstrate.
MYTH 3:
Franchise companies will gladly take your money whether you are a fit or not.
This one could not be less true. The majority of franchisors out there are extremely selective. Most have a mutual evaluation process that is designed so that both parties can get to know each other and determine if there is a good fit. At both Doc Popcorn and Dippin’ Dots, we have an education process that enables a potential franchise owner to learn about our expectations, and for us to know theirs. Franchising involves entering into a long-term relationship between a franchisor and franchisee. Evaluation is a two-way process. You should be extremely honest with yourself and the franchisor about your goals for owning a franchise, what you are looking to earn and what you envision for yourself as the ‘end game.’ That way, you both can figure out if that’s achievable.
MYTH 4:
I’m not really my own boss because the franchisor is in charge.
This is perhaps one of the biggest mistaken ideas about franchising. Franchisors provide a framework, but you are the one building and marketing the business. You are investing in the credibility of a brand, a marketing programme and other systems set up to support you. You will need to follow systems designed to maintain product and service quality, but franchisees have the freedom to make decisions as independent operators on a day-to-day basis. Hiring and firing of their own employees is the most common example. They are also free to innovate in areas that can improve the business. There are dozens of stories of franchisees who suggested menu items that have become top sellers for major national brands, or those whose motivational approaches for their employees resulted in improved sales, which later were implemented across the entire franchise system.
MYTH 5:
When you invest in a franchise, you can just walk away and play golf and watch the money pour in.
While this is something you may ultimately achieve, you have to be willing to work ‘in and on’ your business. Although your level of involvement on a day-to-day basis will vary depending on the type of franchise concept, even franchisors that claim they have an absentee owner model will generally require you to be involved for a certain period of time. After all, if that person you train to run the business takes off to Tahiti, where does that leave you if you don’t understand the business? Not to mention, no one will care for your business quite the way you do. Investing is just the first step. And like any business, you have put time and energy into it to make it successful. It doesn’t happen on its own.
MYTH 6:
You should only invest in a concept that speaks to your passion.
In fact, this is not always the best idea. While it’s not impossible, it’s generally not probable that passion will automatically lead to success. Too many people think “I love dogs, so I’m going to invest in a pet business,” or, “I have always been passionate about cooking, so I’m going to own a restaurant.” It’s more important to ask yourself what you really want to do every day, how much you want to make from a financial standpoint and whether you have the skills to take it on. You want to invest in a successful business so that you can have the money and time to enjoy your passion (e.g., dogs or cooking), rather than abandon your hobby and abhor the business, because it’s now something you have to do.
Ultimately, when investing in a franchise, just like making any major life decision, it’s important to self-evaluate and do external homework. Ask yourself the important questions about what it is you are looking to achieve. Be honest with yourself about whether or not you have the skills, time and energy to put into a franchise business. Look at each opportunity carefully to ensure it’s a match for you. And don’t believe everything you hear, because believing misconceptions can be holding you back from reaching your dream of owning your own franchise … and controlling your own destiny.
ABOUT THE AUTHOR
Rob Israel is founder of Doc Popcorn, the largest franchised retailer of popcorn in the world. Prior to Doc Popcorn, Rob was president of one of the largest private label, children’s sweater manufacturers in America – Knitwaves – which he sold in 1997. Rob is a graduate of Harvard’s Executive Owners Presidents and Managers (OPM) program. He has been a member of Young Presidents’ Organization/World Presidents’ Organization since 1995. Rob teaches at the University of Colorado Leeds School of Business at the Deming Center for Entrepreneurship and serves on the Board of several start-up companies including Grasshaven and Help2Heal.
