Myths, illusions, smoke and mirrors – these are tools of deception that can lead even the savviest professionals astray. It’s so easy to believe an ideal – even when the ideal is just inaccurate information in disguise.
The franchise industry isn’t devoid of these myths. Misconceptions and half-truths cloud the judgment of even the most informed buyers.
However, most people looking into franchise options are actually just misinformed. They read headlines such as, “Buy the Chick-fil-a franchise for only $10,000!” and then call asking how to get started on an application. They see mega food and retail brands, like McDonalds, and think that’s all the industry is. And they believe that franchise success will come if you just buy the trendiest, hottest brands in the market.
However, none of this is true.
No wonder we get hundreds of calls from people who know they want to buy a business but haven’t the slightest idea of where to start…
But that’s what we’re here for! In this article, we’re debunking the top 10 franchise myths and helping potential buyers see beyond the fog of these common misconceptions.
Are you ready to see franchising clearly for what it is?
Myth #1: “If I have a storefront and a big brand name, people will just flock in.”
Ah, the allure of a recognizable brand name. It’s easy to fall into the trap of thinking that once you set up shop with a well-known franchise, customers will magically appear.
Unfortunately, that’s just not how it works.
Don’t get us wrong – having a popular brand name can be a huge asset in attracting customers. But it’s far from a guarantee of success. To truly thrive as a franchise owner, you need to be willing to put in the hard work of promoting your business, building relationships with customers, and delivering exceptional service.
And let’s not forget about the competition. Even with a big name backing you up, you’ll still be up against other businesses vying for the same customers. And with the rise of online shopping, the competition is more fierce than ever.
It’s also worth noting that franchises span far beyond just fast food and retail. From home improvement to pet care to business consulting (the list goes on), there are franchise opportunities in a wide range of industries. The key is to do your research and choose a franchise that aligns with your skills and interests.
Myth #2: “I love the food and the experience SO much, I know I’ll do well as an owner!”
While it’s certainly helpful to have the passion for whichever product or service you’re offering, it’s not a make-or-break factor when it comes to success. Instead, what really matters is the owner’s ability to follow the brand’s established system and put in the necessary work to make it thrive.
The franchise system has already put in the time and effort to develop a successful business model – now it’s up to you, the owner, to execute that model effectively. This requires a broad range of skills – including management, finance, marketing, and leadership, which are all essential to running a successful franchise.
In addition, franchise owners must be willing to put in significant time and effort – especially during the initial stages of setting up the business. This may involve completing training, setting up the physical location, hiring and training employees, and developing marketing strategies to attract customers.
Myth #3: “I have the money to invest in a franchise, but not the time… how do I sign up?”
One of the biggest misconceptions about franchising is that it’s simply an investment opportunity, and that all franchises are owned and operated by the system. Meaning, the owner doesn’t have to do much work in the business.
This is what we call a passive franchise. And though it’s a viable option for those truly just looking for just an investment, most franchises require time and attention from the owner.
Why is it important for franchise owners to be actively involved in the business?
By being involved in the business, owners gain valuable insights into the daily operations, customer needs, and employee morale–just to name a few– all of which can contribute to the long-term success of the franchise.
Myth #4: “What’s the best franchise? I want that one!”
This is big.
A huge misconception about franchising is that what’s trending or popular is always the best opportunity to buy.
However, what’s popular doesn’t always equate to long-term success, and can often be driven by marketing efforts rather than strong financials.
Have you heard of the horror story of the BurgerIM franchise?
Long story short – this franchise system sold 1,000 locations while only having 12 locations up and operating before ultimately fleeing the country and leaving buyers with nothing.
You might be thinking, “why would anyone have trusted the brand in the first place?”
Well, on the outside looking in, they were doing everything right. The food was delicious and had a cult-like following, and their marketing was top tier. With people flocking to each location, buyers wanted in. However, at this point, the franchise system wasn’t stable enough for rapid growth – they were new to franchising, but didn’t want to turn good money away.
Now there’s a lesson to be learned from this. It highlights the importance of carefully evaluating each franchise opportunity, looking beyond the hype and doing proper due diligence.
One key tool for assessing franchise opportunities is the Franchise Disclosure Document (FDD), which contains all the necessary information about the franchise’s history, financials, and other key data. However, simply having access to this information is not enough – buyers must know what to look for and ask the right questions to make an informed decision.
This is where our franchise brokers come in!
They will work with you to evaluate the franchise’s track record, financial stability, and overall support for their owners.
The horror of BurgerIM could have been avoided, if buyers had looked carefully at the brand’s FDD. It was all there, in plain sight.
Myth #5: “I’d love to get into franchising, but I don’t have hundreds of thousands of dollars just sitting around.”
Many people believe that franchise ownership is only for the wealthy because of the high costs involved.
While it is true that some franchises can have a high upfront cost, there are many affordable options available. Some brands even offer financing or other payment options to help owners get started – and loan options are fairly common, too.
It’s important to remember that franchising is not just an investment opportunity, but a way to own and operate your own business. So, with this freedom does come a price. However, there are businesses for many budgets – from the less expensive 40k concepts to up in the millions.
That being said, there’s an opposite misconception about the cost of franchising…that you can own a big brand for $10,000.
You can NOT own a true franchise for 10k or less.
Hear us out…we’re going to gamble to say that you’ve probably come across an advertisement online that reads something like this:
“Buy the Chick-fil-a franchise for only $10,000!” Or, “Become an owner of Steak ‘n Steak, it’s a low investment!”
And we know this because people often call us asking how they can get their hands on these business opportunities – for cheap. It’s almost like it’s too good to be true!
Well, here’s the truth – you can’t believe everything you read online.
It is highly unlikely that you’ll find a legitimate franchise for under $10,000, that sells what a franchise opportunity usually offers – which is a built out system that, in many cases, allows you to act as a semi-passive owner, or “hands-off” owner.
If what you’re looking for is to run the business more like an investor, then a 10k investment won’t get you anywhere. What it will give you, however, is a license to operate the business. Think of it like putting down money to get a job.
Take Chick-fil-a as an example. You can only own the franchise if you’ve worked as a General Manager and worked your way up. In this case, buying a 10k license would give you the opportunity to “do your dues” so you could eventually qualify to own the franchise.
So, if something seems too good to be true, it might be worth looking into.
Myth #6: “I want to be an entrepreneur who has a say in how I run my business.”
Another common misconception about franchising is that the system controls every aspect of the business. While franchisors provide guidance and support to owners, they do not control every decision.
What they mainly control, however, is the operation process.
You want this. It’s what builds the brand name and ease of the business.
Also, depending on the franchise, the system may have control over marketing since many owners prefer not to manage it themselves.
So, what do owners do?
They are typically responsible for leading the business on a day-to-day basis and bringing life and momentum to the franchise. But don’t discount the originality of franchise owners – they are the ones physically engaging with employees and customers. Because of this, they see things differently than the system would – and thus can make their product or service reflect those market needs.
The key is to find a franchise opportunity that has a flexible model. Typically, empire brands (such as Chick-fil-a, Subway, Crumbl, Five Guys, etc) are strict with how they operate and leave little room for creativity.
If what you’re looking for is a business that can showcase your personality and flare as a business owner, then consider smaller brands to start.
Myth #7: “It seems that everyone who buys a franchise has it easy. Not much goes wrong, when it’s all planned out for you.”
Are you under the impression that owning a franchise is a breeze, and success is practically guaranteed? Think again.
While owning a franchise can be an excellent investment, it still requires hard work, dedication, and the willingness to learn and adapt.
Sure, owning a franchise comes with an established business model and a recognizable brand name. However, that alone won’t guarantee success. To truly thrive as a franchise owner, you need to be willing to put in the hard work of promoting your business, building relationships with customers, and delivering exceptional service.
When it comes to the day-to-day operation of these businesses, there are several challenges that owners may face. Here are some of the operational difficulties:
- Balancing brand standards with local needs. Franchise owners must follow the brand standards set by the franchisor while also addressing the unique needs of their local market. This can be a difficult balancing act, as what works in one area may not work in another.
- Hiring and training staff. Finding and training the right staff can be a challenge for franchise owners. They must ensure that their staff is properly trained on the brand standards and business operations, while also finding employees who are a good fit for their specific business.
- Managing inventory and supplies. Franchise owners must ensure that they have enough inventory and supplies to meet customer demand, while also avoiding overstocking and waste. This can be a delicate balance that requires careful monitoring and management.
- Maintaining consistent quality and service. One of the benefits of owning a franchise is the consistency in quality and service that customers expect. However, maintaining this consistency can be challenging for franchise owners, especially as the business grows and more staff are hired.
- Keeping up with technology and trends. Franchise owners must stay up-to-date on the latest technology and industry trends to remain competitive. This can be a challenge, especially for owners who are not tech-savvy or who have limited resources.
Myth #8: “I want my business to be unique and not just like everyone else’s.”
Franchises can vary greatly in terms of industry, business model, investment costs, and other factors. They come in all shapes and sizes!
Each brand truly is unique – so it’s essential to do thorough research to find the right fit for your skills, interests, and financial situation.
Rather than concluding that franchising isn’t a good option for you, because it’s not a completely “unique” opportunity, consider what it is that’s important to you in a business opportunity, and then our brokers can help you find what you’re looking for.
And consider this – any franchise you buy won’t be like any other, for one main reason. They don’t all have YOU.
Myth #9: “I want to retire ASAP. I heard franchising can help set me up for the future, in no time.”
While owning a successful franchise can provide a steady stream of income, it’s not a get-rich-quick scheme.
It’s essential to remember that franchising is a long-term investment that requires ongoing effort to maintain and grow. Yes, the franchise system provides a blueprint for success, but it’s up to the franchise owner to execute it correctly and to adapt to market changes.
It’s a long-term, steady investment vehicle that requires ongoing effort to maintain and grow.
That said, owning a franchise can provide an excellent source of income and set you up for financial stability in the future. By choosing a brand that aligns with your skills and interests, and taking advantage of the support and resources provided by the franchisor, you can create a profitable and sustainable business that can support you in retirement – or other investment endeavors.
Myth #10: “I’d love to own a franchise, but I don’t have much business experience.”
While business experience can certainly be an asset in franchise ownership, it’s not always necessary.
In fact, many franchisors provide comprehensive training and ongoing support to help their owners succeed, regardless of their previous experience. What’s more important is having the right mindset and skills for running a successful business.
Many successful franchise owners come from a variety of backgrounds, including corporate management, healthcare, education, and even the military.
But here’s what they all have in common…
They have transferable skills like communication, leadership, and problem-solving which are critical to running a successful franchise. So, though corporate transitioning professionals are often seen most pursuing franchising, it’s more about the skills those people possess – rather than a previous title.
In addition, franchisors often have a screening process to evaluate buyers based on said skills, values, and goals. They are looking for people who are committed to following their system, but also have the drive and creativity to make the business their own and adapt to local market conditions.
While some franchises may prefer candidates with previous business experience, others may be more open to those who are new to entrepreneurship. Franchise ownership is a long-term investment, and it’s important for potential Franchise owners to evaluate their skills and interests to find a franchise that’s the right fit for them.
Here’s What You Should Believe
There are many myths and misconceptions about franchising that can deter potential Franchise owners from pursuing this path to business ownership. However, by understanding the realities of franchising and doing thorough research, individuals can make informed decisions about whether franchising is the right choice for them.
Franchising offers many benefits, including a proven business model, support and guidance from the franchisor, and access to established brand recognition. However, it’s important to dispel common franchise myths, such as the idea that franchising is only for the wealthy or that the system control every aspect of the business.
So, whether you’re an experienced business owner or new to entrepreneurship, franchising offers an opportunity for long-term success and financial freedom. If you’re considering franchising as an option for business ownership, take the time to research, evaluate your skills and interests, and find a franchise that’s the right fit for you.
We can help you find it, too!