It goes without saying that franchising myths can be spread by anyone, not just your neighbor, but in the case of this blog, we need an antagonist. So we’ll assume he/she is a neighbor of yours. While you’re on the path to self-discovery and ready to take control of your financial future, the neighbor is quick to offer advice — of the negative kind. In the franchising business, we get this a lot: “Well, my neighbor told me…..”
Below, we tackle five kinds of myths about franchising that are fairly common, and which we are set to debunk.
Myth No. 1 – Franchises are just made up of fast-food and retail opportunities.
First and foremost, there are over 3,100 different franchise concepts on the market today. If this myth was true, there would be a heck of a lot more fast food outlets in your area. In reality, franchise opportunities can be found in more than 90 different industries including education, pet care, cleaning, real estate, health and wellness, and even IT services. Sound like you might be able to find a fit somewhere? And finding the right fit is key – and don’t be surprised if the best franchise fit for you has nothing to do with your experience. Ideally, find a business that fits your goals, lifestyle, ideals and budget before finding one that simply meets your experience. There are plenty of choices out there.
Myth No. 2 – Franchises are too expensive to consider.
We believe this may be the single most common misconception. Study after study has shown that when most business-seekers are polled about the cost of franchising, their answers are often wildly off the mark. Some even believe it takes $500,000 to $1 million just to get established, but this couldn’t be further from the truth. According to a 2010 study conducted by FranData, a full third of all franchise opportunities actually cost less than $100,000—and of that amount, only 25-30 percent needs to be in the form of liquid capital. The rest can be financed. And many business seekers are unaware that there are specific 401k and IRA rollover plans that allow you to fund your new business tax-free and penalty-free.
Myth No. 3 – Franchises succeed because of the quality of the product.
Not so fast, my friend. Do you feel that a hamburger cooked on your backyard grill is better than a McDonald’s quarter pounder? It probably is, but McDonald’s sells a lot of hamburgers every day. Why is that? While many leading franchises enjoy a great reputation solely because of their branding efforts, the true measure of success can be found in the depth of their operating systems and programs. With a true franchising opportunity, you’ll be schooled on superior marketing, sales, operations and accounting systems—all of which are specifically designed to consistently deliver the level of success necessary to flourish in the business world.
Myth No. 4 – Successful businesses only emerge in new industries with little or no competition.
If you believe this is true, you aren’t paying attention. With franchising, it’s the systems that create the success. To re-visit the McDonald’s example, they began to flourish in a marketplace where you could buy a hamburger on every street corner. And they accomplished this because they had an innate understanding that the creation of consolidated efforts and systems promote success. Effective marketing and operational systems drive profitability, not the lack of competition.
Myth No. 5 – A high return on investment requires a high level of investment
It takes money to make money, right? Isn’t this what you’ve always heard? Well, with franchising, there is no automatic correlation between the cost of a particular franchise and its potential return on investment. In fact, many of the service sector businesses require far less initial investment, but routinely yield higher returns due to a lack of overhead. The real key is finding a franchise concept which applies to your skill level and depth of experience—in essence, the perfect fit. And we know just the place to help you begin.
Do you feel that you’re ready to get started? If this article has inspired you dismiss the five popular myths of franchising, perhaps it’s time for a free consultation with a qualified and experienced franchise consultant. As it turns out, FranNet is just the place! As a franchise consultant company with a great track record of assisting individuals on their path to business ownership, make arrangements to speak with one of our locally-based consultants in your area today.