10 Myths in Franchising

If you are interested in franchising as I do, you must have been heard opinions and recommendations about franchising.

Unfortunately not all people offer you the right recommendations, and sometimes people’s opinion on franchising is not based on the truth.

In many cases, all you hear about franchising is actually myths!

10 Myths in Franchising

Here is the 10 myths in franchising:

  1. Being rich through franchising
    Unless you are the franchisor or you own MacDonald’s, this is misleading. If your definition of ‘rich’ is being financially free, then you need multiple successful franchise units. I never encounter a case where owning a franchise unit will make you rich!
  2. Franchising requires nothing on your part
    Not true. Owning a franchise unit requires a certain amount of work. It’s not the type of business that allow you to invest and forget. Yes, some franchisors allow absentee franchisees, but not the way you might expect. Controlling and management are two equally important thing a franchise owner have to do.
  3. Owning a franchise unit is your shortcut to entrepreneurship
    Not automatically. Entrepreneur can’t be bought – investing in a franchise unit is not you shortcut to entrepreneurship. Even many experience that although franchising requires a certain amount of entrepreneurship, you have to follow certain rule that, in effect, limit your entrepreneurial idea.
  4. Your success is guaranteed
    Wrong. Franchising is about offering your an established brand name and tools to succeed – the only person that can guarantee success is you. If you know a franchise offering you a guarantee to success, run away from it.
  5. Franchising cut the chase of trial and error
    Well, most of the case, you are still have to take a certain degree of risk, frequently – trial and error is a natural part of business. Franchiors give you road map, but how you drive through it is up to you.
  6. Franchising save you money
    Not always. Franchising main perk is buying power and economy of scale. But as a downside, there is a certain of percentage from your income should be contributed as marketing fee and royalty fee.
  7. Your franchise big name is your biggest asset
    Nope. You ‘rent’ the brand name of your franchisor, and the brand name is forever hers. The brand name helps you in business image and marketing, but those don’t make the brand name yours.
  8. Fast growing franchise is the best
    Not always. Although a good indicator of a good franchise, fast growing can mean that the franchisor focuses on expansion over build internally. This is not a good thing if you are the ‘old’, existing, franchisee – you might not getting the support level you once received. I rarely heard a franchise that can excel the balance of expansion and build internally. There always be priorities.
  9. Carrying the franchise brand name well known nationwide, even globally, is bliss
    Not always. If your franchisor mismanaged the business and put the franchise reputation at stake, you share the negative reputation your franchisor is getting.
  10. Franchising is an equal partnership
  11. Never. You are always at your franchisor’s mercy. The franchise partnership model is top-down. Just read your franchise agreement carefully – you will notice that almost all written down is to protect the franchisor’s interests. And oh, if you don’t comply, you will be kick out of the partnership – this is not equal :)

Consider the 10 myths above, and enter franchising with the right mindset.

The best thing to do before investing in a franchise unit is by contacting other franchisees. They are your best source of first-hand information. Take heed, though – franchisees might not be fully honest to you – some fear of your competition, and some simply not satisfied with their franchisor.

If you have what it takes, franchising is definitely a lucrative way to grow your investment aim for financial freedom.

Ivan Widjaya
Franchising myth buster