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The world of franchising explained

The idea of owning a franchised business is appealing to many first-time business owners. The lure of buying into an existing, successful business model is hard to resist with many urban myths on the ease of owning and running a franchise. With many franchises failing within the first year of business is proof that the idea of a franchise that runs itself is nothing but a myth. This myth is the first and biggest pitfall of the Franchise business. So, first time investors, ask yourself the ultimate question before you commit to a franchised business, ‘Is Franchising for You?’

The first question before committing to a franchise is to know what franchise to pick. Most investors run through the plethora of available franchises and prefer to take one up, that is more attuned to their personal sensibilities. This may not be the best for the brand or the franchisee. A franchise, like another business, is dependent on the local market. If the product is sellable and has a demand in the area, the chances of it bringing in profits are higher. Buying into a franchise that is attuned to your personality will only offer you a happy work place.

The second question before settling down on a franchised business is, ‘How much time can you give the business?’. The idea of the self-running franchise, working at your own pace, and that the franchisor does most of the thinking are all myths. The reality is that a franchisee is solely responsible for the franchised business. Forget the Franchise myth of a 40-hour week, depending upon the business you choose, you may end up spending 70 hours a week to make sure everything runs right. Franchisees must understand that the business does not run itself, each outlet requires management, either from franchisees or from employees hired for the job.

The most important question to ask yourself before you invest in a franchise is, ‘can you afford the franchise?’ Though Franchisors will take in some of the costs to get the franchise up and running. Most franchises that die within the year die because of low capital. Franchisors can provide average running costs, but the franchise is still a business and needs to have enough funds to run till it is profitable. Most franchises start with a bang, but revenues coming in is solely dependent on local market conditions and how franchisees can tackle problems that arrive on a regular basis.

If you believe you can run your own business, toe the line and follow orders, put in the man hours, then buying into a franchise might bring you the financial rewards you seek.

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