Should 'Franchisee' Be Your Next Job Title?

In today's tough economic climate a significant number of
unemployed executives and managers are investigating franchise opportunities as an alternative to finding
another job. Truth be told, most of these former executives would
probably rather have their old jobs back, or at least something new that
pays the same as their old position and has more or less the same
responsibilities. They are turning to franchising because it is becoming
more and more apparent that finding a good job might not happen any
time soon.

This leads to a great question for these folks to
consider: What is the difference between getting a job and owning a
franchise? There are definitely advantages and disadvantages to either
choice. The right answer varies from person to person, based on what
they want to achieve in life and how they feel about factors like risks
and rewards. Let's start by taking a good hard look at the status of
both the job market and the franchise industry.

The
job market today is a mess. Not only is unemployment high, but the few
companies that are starting to hire are taking advantage of the
marketplace by raising qualification requirements and slashing starting
salaries for new positions. They still get willing and qualified
applicants lining up at the door, so why wouldn't they do this? Many
unemployed executives have realized that the job they used to simply
doesn't exist any more at that salary they were paid, and there's no
telling when or even if it will return. This dynamic is causing a
phenomenon of "under-employment" that may take years to correct itself.
It's not a pretty picture for the job seeker.

The franchising industry is also suffering in today's market. Many
franchise concepts have found that the recession cuts deeply into their
revenue and margins. In many sectors, only the strong will survive the
wait for normal economic times, which means that a prospective buyer has
to be even more careful than usual in selecting the right opportunity.
The disintegration of the credit markets has made franchise startup
lending a thing of the past, so the new franchisee will likely have to
look to other resources for the capital to start a business. Most
unemployed executives don't have large reserves, so they must find a
franchise that starts earning a positive income as quickly as possible.
All of these factors make finding a great franchise opportunity potentially more challenging
than it was in the past.

Even though the current marketplace isn't
great in either arena, there are good opportunities for the careful
seeker on both fronts. As you evaluate either option, keep in mind these
three key areas that differentiate the two:

• 
  

  Income:
  Both a job and a franchise should provide you with an income. With a
  job, the income is typically clearly defined; you know what your salary
  is going to be and how often it is going to be paid to you. There may
  also be non-fixed income (commissions or bonuses, for example) but that
  is still usually pretty easy to estimate in advance, so a job provides
  quite a bit of certainty in relation to income. With a franchise,
  especially in the short run, your income is far less certain. It is
  quite common in a business startup to work for some period of time
  without any fixed income. Though the long-term income prospects may be
  quite a bit higher in a franchise, you need to make sure you have
  adequate reserves to live on while you are going through the initial
  building phase.

  
  


• 
  

  Wealth: Having ownership in a business is the
  classic path to creating wealth. When you build a franchise business you
  are building an asset that grows in value and can eventually be
  sold--hopefully for quite a bit of money. This wealth payoff to the
  franchise owner is on top of the income received during the operation of
  the business. Owning
  a franchise involves taking more risk in the beginning, but the reward
  is that any wealth created through your efforts will accrue to you
  rather than to someone else (as it does when you have a job). This
  factor is very important to most people who choose to go the franchise route.

  
  


• 
  

  Control:
  With a job, your control over your work efforts isn't very high. You
  basically have an employer who tells you what they want you to do and
  how they want you to do it. If you own a franchise, you are the employer
  who is telling others what you want done, and you are completely in
  charge of what you do at work. This fundamental difference is one that
  is very appealing to some people but uncomfortable or even frightening
  to others. As you evaluate which option is better for you, this is
  something you should carefully consider to make sure you go in the
  direction that best suits your personality.

  
  

Is a job or a
franchise better?  There is no right or wrong answer. It depends on a
person's priorities and what they are trying to accomplish in their
life. The basic trade-off is pretty simple: A job has more income
certainty but owning a franchise has more wealth-creation potential and
allows for greater control. Each person needs to determine the balance
between these factors that works best for him or her.

Jeff
Elgin is the "Buying
a Franchise" coach at Entrepreneur.com and has 25 years of
experience in franchising, both as a franchisee and a senior franchise
company executive. He's currently the CEO of FranChoice Inc.,
a company that provides free consulting to consumers looking for a
franchise that best matches their needs.