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Five Common Myths About Franchising

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🕒: Six minutes

Five Common Myths About Franchising

When considering starting a franchise, the best thing you can be is well-informed. Information is available from a wide variety of resources; from current franchisors to franchisees in the industry you are interested to online information centres. A great deal of relevant, accurate and essential data can be collected from these sources but it is important to carefully consider all the information you receive.

There exist some fundamental misconceptions about the franchise industry which may be purported by the information you discover. It is essential that you can differentiate between fact and fiction to ensure that you start your franchise with all the right information. This article contains a breakdown of five of the most common myths about franchising which you may encounter in your search for information.

Myth Number One – “The Franchisee Owns the Brand”

This is perhaps the most common myth about franchising and it stems from a lack of understanding about what franchising actually is. The franchise agreement between the franchisor and the franchisee sets out the terms and conditions of starting the franchise and, in every franchise, there is a wide variety in the flexibility of these terms. However, a franchisee never owns the brand of a franchise.

When you buy a franchise, you buy the right to use the brand, the business model and all associated trademarks of the business. You are purchasing the right to operate the business model within a specific location, under a set of pre-arranged conditions. It is essential that you understand this distinction before you consider starting a franchise.

Myth Number Two – “The Franchisor Will Run Your Business for You”

This second common myth about franchising is intrinsically linked to the first. Though, as stated above, as a franchisee you do not own the brand, you are very much your own boss and you are responsible for the success of your business. The franchisor will have a varying degree of control over your franchise but they are not going to be involved with the day-to-day running of the business.

The franchisor is responsible for your initial training and should ideally provide support throughout the entirety of your time as a franchisee but this does not mean that they will run your business. It is up to you to put in the time and the effort needed to make a success of your franchise. You will, however, be aided through this process by the training you have been given, and by the support systems and business models put in place by the franchisor.

Five Common Myths About Franchising

Myth Number Three – “You Should Always Choose a Recognised Brand”

There are a number of high-profile franchises that come to mind when somebody mentions franchising, such as McDonald’s, 7-11 and Subway. Franchising is often associated with large international endeavours and a common myth is that, when looking for a suitable franchise, you should be looking for a business with extensive brand equity and a widely established customer base.

There are, of course, significant advantages to choosing such a franchise but it is not necessary for success. Widely recognised brands tend to have very high entrance costs and to be more strictly regulated, reducing your capacity to instigate the changes required for profitability in your locality. All successful brands start somewhere and you should not dismiss a viable opportunity because it is not yet widely renowned. The franchise should, however, be a proven business model and be able to provide at least two years of solid financial records.

Myth Number Four – “Franchises Are Very Expensive”

The myth that all franchises are extremely expensive is fuelled by the misconception that a prospective franchisee should invest in a ‘big brand’. There is a huge variance in the price range of franchises and you are likely to find a suitable opportunity no matter your budget. It is important also to consider the running costs of a franchise and the personal costs you may incur during training, and not to assume the minimum investment figure quoted will be your total investment in the business.

If you are looking for minimal investment, you may wish to consider a business opportunity. This is a pre-packaged business which allows you to start a business using a specific product or service. Business opportunities tend to be cheaper than buying a franchise but have the disadvantages of limited structure, less regulation and little ongoing support.

Myth Number Five – “You Need a Lot of Experience to Start a Franchise”

If you are a potential franchisee looking for information on franchising, you are likely to run into the myth that you need a great deal of experience in order to start such an opportunity. The greatest advantage of starting a franchise is that you are given training and support, which negates the requirement of having run your own business or gained experience in specific systems or industries.

There are, of course, franchise opportunities which demand a certain level of experience but this requirement will be explicitly stated on the franchise profile and such franchises are relatively rare. In general, franchise owners are looking for candidates with the right transferable skills. You may not have worked in the education sector or the healthcare sector before, for instance, but if you are hard-working, patient and organised then you have many of skills required to thrive in this industry.

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