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Truths and myths of a franchise business

Tags: Regardless of being a rewarding business, there are a number of misconceptions about franchise ownership. Some of the common myths about franchise are: Finding the right business: Many entrepreneurs keep waiting for the right business opportunity that fa

BY Abha Garyali | October 13, 2009 | comments ( 3 ) |

Franchise myths

Are you an aspiring entrepreneur with dreams of having your own business. The best available option is to take up a franchise because compared to an independent business a franchise already has a brand, customer loyalty and systems in place. Despite all these advantages there are a few myths in the mind of every entrepreneur. Elucidate your doubts and take a step forward in a franchise business

Regardless of being a rewarding business, there are a number of misconceptions about franchise ownership. Some of the common myths about franchise are:

Finding the right business: Many entrepreneurs keep waiting for the right business opportunity that fascinates them. The entrepreneur should not limit his choices to what he is familiar with or good at. By doing this he will be placing himself at a disadvantage by ignoring good business opportunities just because he is unfamiliar with them.

Lack of freedom: Before taking up a franchise some entrepreneurs doubt that they will not have any freedom to run the business as the franchisor would run the business in his way. But as per the franchise outlet is run there a few limitations that a franchisee has to keep in mind like the original signage, colour combination and interiors of the store etc. for the success of the franchisee’s outlet. Except this the franchisee can use his creativity and come up with new ideas and suggestions for his outlet.

The franchisors just guide the franchisees to follow the original décor and designs. Beyond that it is the franchisee’s wish the way he wants to run his business.

Individual business and a franchise are equivalent: To a business novice there is no difference between running an independent business and taking a franchise but there is a world of difference between the two. Franchisee has to invest his money in the business and give royalty to the franchisor whereas in the independent business started by the individual he does not get any support and recognition. The entrepreneur who runs an independent business does not even get the benefit of the brand image to support the business from the beginning. Moreover the franchisee has the support and training of the franchisor, which helps him grow more quickly than he could on his own.

Financial Fable: There is another myth regarding running a franchise business that one has to have adequate funds but the truth is that anyone with a basic business sense can run a franchise availing loan from banks and other sources. Some entrepreneurs believe that they need a lot of money to buy a franchise but there are a few franchises in which the cost of running is quite low. The one time fee to the parent company and royalty given is also reasonable for any aspiring franchisee.

Bigger the franchise, the more chances of success: It’s true that a big franchise company can give better training and has stronger marketing systems. But smaller franchisors too can provide better encouragement and a more friendly relationship for franchisees to develop.

The franchisor just wants to get richer: To many of the inspiring entrepreneurs it may seem that the only concern of the franchisor is to get richer by taking the fees from the franchisee but in reality the franchisor cares for the success of the new outlet as it will add to his brand success. The parent company provides proper training, guidance in marketing etc to the new franchisee, thereby reducing the risk of failure.

Time Devotion: People who want to supplement their income can also go for franchising. Many franchisors prefer full time franchisees but there are some franchise concepts that are specifically designed for people who are doing other jobs as well. Therefore it is a myth that one requires to devote all his time to a franchise.

Well these are a few myths mushrooms in every entrepreneur’s mind. All these myths   can turn true if the prospective franchisee does not gather all the information about the company before buying the franchise. If you do your homework properly you can find the right franchise opportunity. But a franchise can fail also, not due to these myths but the people involved.

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Please add your comment

November 18, 2009 at 10:29 pm

Reply |  

If you are first franchisee of an organisation there is no guarntee after taking the franchisee fee he may not respond you well. Secondly No franchisor wants see his franchisee growing than himself. In certain areas you need brand but not in every sphere. Now a days every third person has started selling his franchisee.

October 13, 2009 at 9:18 pm

Reply |  

continue-----Do you really need brand name( like may be needed for apparel brands etc, not for a cyber cafe/gaming center or for a restaurant or so)These things will save you lots of money.

October 13, 2009 at 9:17 pm

Reply |  

It is very very important that one takes finances into account before starting a franchise.100% Franchisers will tell a lot of lies.take word by 50% only.calculate your finances by reducing the projected revenue by franchiser by 50%(if it comes true its good for you).Get you agreement checked by a lawyer.Read each and every point carefully.You should not take less than 1 week to understand it properly.Also think why can't you do the business independently.

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