Franchise’s success myth

Each year about 26% of young businessmen start their first business as a franchise, but just 66% of them are successful. So what are the main problems that ending up with the wrong choice?

First of all it is an initial expense. Federal Trade Commission’s Bureau of Consumer Protection have a list of nonrefundable franchise fees from tens of thousands to tens hundred thousands of dollars. And it is not all expenses, most of people forget about ongoing royalty payments; operating fees; opening fees and advertising fees; rent equipment; marketing; inventory and business setup. There is no way of “just buy a franchise after viewing some webpage or talking to business owner once”. This kind of business needs a full research of the company’s history, owners, their other business activities and financial history. This information is not open and nobody will show it, so the investigator has to do their own research of how this franchise relate to other businesses within its league.

Secondly, even if the franchise is a well-known brand, including product logo and advertising campaign the new enter owner should have a clear idea of a franchiser’s control. There is an agreement that dictates mostly everything from the prices to employee pay rate. That may include the dress code, hour rates, and hours of operations and so on. Any default of these details may the franchise default without expenses refund.

Thirdly, it is incredibly difficult to work with it by your own. The owner need to have suggests from people who have an access to the right machinery and the right business partners, franchises owners. Start the business is a hard job and it always better to allow professionals do their job. Buy a franchise is not a buy a guarantee of your rich life. But who dares wins.

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