Buying a Franchise – If You Think Owning a Franchise Unit is Easy, Think Again!

Buying a Franchise - If You Think Owning a Franchise Unit is Easy, Think Again!I owned several local franchise units. To tell you the truth, the first time I buy a franchise unit is my effort to cut my way into entrepreneurship. I thought it was easy. It’s not.

I learn franchising the hard way. Many people, just like me, buy a franchise unit with a wrong reason – mainly, they want to take a short cut into the world of entrepreneurship and to live an American Dream – fast cars, house with pools, lots of zeros in bank accounts, etc. This way, they – including me at that time – will be guaranteed failure even before the business itself run.

Franchising takes a lot of work – and money. You see, the premise behind franchising is that you ‘lease’ a proven system – developed through trial-and-error and involved a lot of resources – in exchange for a sum of money (typically a franchise fee and a royalty fee). Expensive? Yes. In return, you’ll receive support and expertise that will help you to run your business. Therefore, are franchise units are less likely to fail? Yes. But they DO fail, although on a significantly lower rates – mostly, it’s not the franchise system that fails. The franchisee is the main culprit.

I love franchising. I love the idea of running a business will less risk of failure. But somehow, I failed in one of the franchise units I owned. Why? Again, wrong reasons to buy the franchise unit.

Wrong reasons to buy a franchise unit

  • Get rich quick – If a franchise offer you this, run away! Getting rich in franchising is a marathon, not a sprint
  • Franchise units are easy to run – The system is there, but it’s not easy to run. Not only customers expect you to perform, but also your employees and your franchisor
  • The system will run the business by itself – Not possible! You need manpower, and manpower need to be managed
  • Customers will come by themselves because of the brand name – Yes, they will probably do so, but retaining a returning customers are paramount, and this is what most franchisee forget to do!
  • To become an entrepreneur – Entrepreneurship can’t be bought! It’s action and hard work that make someone becoming an entrepreneur. Even in most franchising case, entrepreneurship is suppressed! Franchisors need people who can follow rules and guidelines, not people who try new things all the time.

If it’s not easy, why franchising is so appealing?

Franchising IS appealing. If you can follow rules and guidelines in a system, you are most likely to succeed. Creativity is usually encouraged, but it must be under franchisor’s approval. Following franchisor’s footsteps is highly encouraged – it’s the only blueprint to success.

Some words of advice on becoming a successful franchisee

Of course, it’s your job to choose the right franchise – bad franchise will always mean bad result for you, no matter how hard you try to improve your franchise unit.

So, do your homework – list franchises that you are having interest in, and contact them one by one. Don’t do this by phone! Meet face to face and have a conversation, because franchising is like having a family – You stick to your franchisor for a lifetime of your franchising agreement. No matter how promising a franchise is, if you are not comfortable with your franchisor, just move on.

Schmooze your franchisor! Spread good words of your franchisor to your colleagues. Give valuable advice. Help your franchisor solve business problems. You will reap what you sow in one way or another – good words on you, referrals, unexpected opportunities, etc.

Don’t team up with other franchisees to form a union against your franchisor! Network with other franchisees to develop and market the franchise, and most likely, your franchisor will help you with resources, including funds. Your franchisor’s fund for your franchise units benefit – sweet deal! :)

Patience is key. Franchise businesses do return your investment in longer period than other type of businesses. But the system will provide you longer business life cycle and longer period to reap for profit. If you don’t see results immediately, relax. In my experience, that is the typical franchise business – longer return on investment, even longer break even point.

The most important tip: Follow your franchise rules and guidelines. I can’t stop reminding you of this because it is very important. Most of the time, your ability to follow rules and guidelines will eventually determine your success. Trust me, I’ve been there.

If you have all the resources and mindsets needed, I highly recommend you to buy a franchise unit. Lower risk, longer business life cycle, longer period for profit – It’s heaven, IF you are the right person for franchising.