8 Franchise Ownership Myths

Forget the hype and stake your claim to all the rewards franchising has to offer.

By Terry O. Powell   |   August 03, 2009

As
a 25-year veteran of the franchise industry and a multi-brand
franchisor, I've seen tremendous growth in the popularity of
franchising. However, a number of misconceptions about franchise
ownership still exist, and if you accept them at face value, there's a
good chance you'll be robbing yourself of an opportunity that can be
not only financially rewarding, but also personally satisfying. Before
you make up your mind, it helps to know the facts. Here are eight
franchise myths that will help you realistically evaluate whether
buying a franchise is right for you:

Myth 1: I'll only be successful if I find the right business
Many
of us define "right" as what we're already good at. But don't limit
yourself. Define your transferable skills from the corporate world:
delegation, management, marketing, etc. If you had them in one type of
business, you can easily use them in 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 by 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 an opportunity to understand
its potential. You simply can't do that when you make a determination
based only on what you feel today.

Myth 4: I can't be in a business I know nothing about
Of
course you can. It's natural to want to stay in your comfort zone and
stick to areas you have experience in. But as a franchise owner, your
job 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 franchise system--which is
already a positive working model--and 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 myths about franchise ownership. In
actuality, there's tons of room for individuality. The franchisor
"dictates" only one thing: the basic system--the framework, if you
--that's already proven successful. Beyond that, you're in charge.
You're managing your business. You decide who 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, they
don't. It's a win-win situation.

Myth 6: Franchises stifle creativity
Again,
this is patently untrue. The only limitations you have are 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 you to think up new ideas and make
suggestions to corporate. In fact, most franchise parent companies
encourage suggestions, because it's where they get many of 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 started for as little as $12,000. Your only
payments to the parent company 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, which will 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, a large percentage of franchise owners are passive
rather than full-time investors.

Can
franchises still fail? Sure they can. But the vast majority of the time
this is due to the owner deviating from the system and cutting corners
by using inferior materials or altering formulas. The key to making it
as a franchisee 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 skills.


All told, there are more than 900,000 franchised business in the country, which account for over 11 million jobs nationwide. They produce $2.31 trillion (yes, trillion with a "t") in total economic output and represent $660.9 billion in private-sector salaries. Those figures are tough to argue with. Perhaps it's time to stake your claim.