The 6 Biggest Misconceptions About Purchasing a Franchise
Posted on 18th May 2022 at 10:48
If you’re considering purchasing a franchise, the best thing you can do is make sure you are well informed.
There are many common misconceptions about the franchise industry but, by doing your research and speaking to those who have already been through the process and know it first-hand, you can differentiate between fact and fiction and make an educated decision about whether franchising is right for you.
Here are 6 of the most common mistaken beliefs many people hold about purchasing a franchise, and some insight based on our discussions with prospective franchisees.
1. It’s cheaper to start your own business from scratch
One of the biggest misconceptions people hold about purchasing a franchise is that it’s expensive and it’s cheaper to start your own business from scratch.
In my experience, this couldn’t be further from the truth. It has taken us eight years to get our business model right, and we have invested far more into it than it typically costs to purchase a franchise.
Franchising investments can usually be worked to your own budget, but an important thing to remember is that purchasing a franchise will likely come with several benefits that a start-up would not.
2. You won’t have any independence as a franchisee
Another myth I hear a lot is that you won’t have any independence as a franchisee because the franchisor makes all the decisions, but this is simply not the case.
Of course, you do have to follow the franchisor’s basic system or ‘business blueprint’, but you will normally have flexibility in key business decisions, such as your location, who you hire and how you promote your business in the local area.
If you do have any concerns about this, before you commit to buying into a franchise, have a conversation with your potential franchisor and find out directly from them how things would work and what their level of involvement would be, so you can be certain flexibility is guaranteed.
3. The franchisor will build the business for you
Although the franchisor does set up a selection of frameworks and systems for your franchise to work within, owning a franchise isn’t a passive form of income and the franchisor won’t build the business for you.
While brand recognition, location, and a developed business system can take you far, you will still need to spend time developing, managing and growing your business - the benefits of franchising do not automatically guarantee you success.
Owning a franchise is hard work, and the only person responsible for making your business a success is you.
4. You need a lot of prior experience
The level of experience you will need to successfully run a franchise depends on the franchise model, but you may not need to already have specific industry knowledge.
Of course, having previous experience working in a well-established business at managerial level will aid your success as a franchisee and provide you with the foundation knowledge to run your own business. However, it is far more important to have the right attitude, as the franchisor will provide the specific training you may need.
5. The well-known franchises are the best
Many assume that the well-known and well-established franchises are the best, but this is not necessarily true. Clearly a well-established franchisor is likely to have a large number of franchisees and will be able to point to some successful ones, but this doesn’t mean new and emerging franchises are no good - quite the opposite, in fact.
Established franchises may well become complacent, whereas a good new franchise might be disrupting the market with new ideas and technologies, adapting much faster to changing needs. You may also find a more established franchise more restrictive, and a younger one more adaptive to you and accepting of your ideas.
To decide the type of franchise that is best for you, you need to decide what kind of business would give you satisfaction to build, however any good franchise, young or well-established, should:
• Have created a differentiated product or service that gives them a competitive advantage and leads to a sustainable [and profitable business model
• Be doing things ‘properly’. For example, are they members of the BFA [British Franchise Association]? This indicates that they are taking franchising seriously and have ‘jumped through several hoops’ to satisfy the BFA requirements
• Be good at engaging with and delighting customers. Do they have a proven route to attract new customers and systems to engage them in the business?
• Excel at training and developing new franchisees. What is their training programme like and how do they help their franchisees to be successful?
Even franchisors looking for their first franchisee should be able to demonstrate the above if they are to be taken seriously.
6. You should wait for the perfect time and the perfect franchise
Many people ‘fantasise’ about starting their own business, whether it be a franchise or not. They may have great ideas, but the timing isn’t quite right, or maybe the business idea is quite perfect. They are waiting for the stars to perfectly align and of course they never quite do – so 99% will never actually start a business.
It is the same with franchising. Only around 1% of people looking at the idea of franchising will actually take one up. The other 99% will say they haven’t been able to find the ‘right’ business. Perhaps the investment is a little bit too high, the returns not quite ‘guaranteed’ enough, or maybe a little bit too much work is required.
The 1% will decide that ‘now is the time’, do their due diligence, find a good franchise that suits their goals and make it work for them. At some point, you just have to make the decision that you are going to do it and set the wheels into motion. Are you in the 1% or the 99%?
Franchising is an amazing way to branch into entrepreneurship, but there is a lot of misinformation out there holding aspiring franchisees back from ever getting started.
By arming yourself with as much information as possible, and knowing the untruths to overlook, you can ensure you buy into a franchise for all the right reasons. But at the end of the day, you need to decide to leave the 99% behind!
Have a look at what BizSmart Franchising opportunities offer HERE.
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