There are thousands of franchises operating in America today, and that number is on the rise. Reduced start-up costs, established name recognition and branding, training, and ongoing support are significant advantages. But that doesn't mean that owning a franchise is lunch at Le Cirque. Let's take a look at franchising from the upside - and the down-low.
Improved Chance of Success
The Upside
Security is a big draw, especially in an uncertain economy. According to the Small Business Administration, although 30 percent of all independent businesses fail in their first year, almost 100 percent of franchises stay in business. And, while the vast majority of businesses fail within five years, 80 percent of all franchise operations successfully reach the five-year benchmark.
The Down-low
Be careful here. Just because you're not starting from the ground up doesn't mean you won't be working long days and long weeks, managing difficult people and continuously putting out fires. Whether you opt into a pizza shop, a drycleaners, a hardware store or a childcare center, it will tap into - and sometimes sap - your energy and financial resources. This is no surprise in the entrepreneurial stratosphere, but it's easy to minimize the risk in your mind when you're joining an established franchise.
Emotional Draw
The Upside
You've had it with the work-a-day grind and you're ready to step out and start doing things your way. Sure, it'll be hard but you're ready to be accountable for your mistakes -and to benefit from your successes, instead of filling someone else's pockets. Besides, you're an avid tennis player and you're buying into a sporting goods franchise. What could be better than spending your days surrounded by the things you love, and helping like-minded people fix their backswing?
The Down-low
There is no doubt that passion and entrepreneurial spirit play a significant role in the success of any business. But if your top two reasons for becoming a franchisee are freedom from the 9-5 daily grind and that you love golf, pause and take a breath.
Franchising is a business like any other and will require stamina and determination. Sure, you're selling products you love and that passion will help you build customer relationships, but you're buying the franchise to make money. And making money is about more than believing in your product line.
Among other things, you will oversee:
- Day-to-day operations
- Sales
- Management/supervision
- Marketing and public relations
- Dispute resolution
- Recruitment and candidate assessment
And you probably won't have much time to play tennis, at least for a while.
Franchisor Support
The Upside
Franchises provide structure and support. In fact, your franchise agreement will require that you follow certain rules and guidelines. The training, advertising, assistance with location selection, and ongoing guidance franchisors provide are incredibly valuable. Even people with little business experience can leverage the franchisor's expertise for success.
The Down-low
For some people, conforming to the franchise structure is difficult. Die-hard entrepreneurs may come to resent franchise parameters over time. And with the benefit of franchise marketing and advertising come the danger of bad publicity. If any other part of the franchise system generates negative publicity, you will be affected by it too.
Most would-be franchise entrepreneurs possess super-human drive. Just don't let that same determination blind you to the realities. Consider the down-low of every facet of businesses ownership. A sound decision is the ultimate upside.
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