When someone decides they want to become a business owner, they have two options: set up their own business, or buy and start a franchise business.
The latter can often seem like the easy option; you simply purchase someone else’s successfully tested method, and sit back and relax as the profits come rolling in. Right? Unfortunately it is not quite as straightforward as that.
Misconceptions like these are popular and are therefore easy to believe, but if you are thinking of starting a franchise business you need to be clear on the actual facts to ensure the best possible chance of success.
If you have ever been taken in by any of these wrong impressions, then this guide is for you. We’re going to talk through the five most common misconceptions of franchising, and the extent to which they are actually true.
1. It is easier than starting your own business
Purchasing a ‘business in a box’ may sound like it will be a piece of cake, but that is not the case. Although you will benefit from the direction and support the franchisor will provide you with, as well as certain shortcuts from the already established brand, this does not mean you are in for an easy ride.
It could actually take months or years to generate a profit from the franchise business, with the average being between 18 to 22 months.
It is certainly not a lifestyle business, and you will need just as much business sense as if you were starting up your own business.
For the franchise business to succeed, it will require hard work, especially in the initial stages. The foundations will need to be built by you with help from the franchisor, and there will be initial pains that you need to go through too to reap the rewards later on down the line.
2. It is less risky than starting your own business
Starting a franchise business may seem simpler because you are more likely to acquire funding, as a large number of startups fail within their first five years and are therefore seen as risky by lenders.
With a franchise business however, the risk is regarded as significantly lower, because the system has been shown to work. As a result, acquiring funds should not only be easier, but lenders may also offer better terms. On top of this, many franchisors provide third-party financing options that you could benefit from.
Although lenders may see your business as less risky, it is imperative to remember that no venture has a 100% guarantee that it will work. The franchise system having been tried and tested does not mean that it is as simple as buying the business and the profits magically appearing.
Having the right tools will certainly benefit you though, and the franchisor can help with this, for example by providing an outline of the anticipated costs.
3. You have just as much freedom as a regular start-up
Many go into managing their own business because they do not want to report to anyone, and they crave the freedom to operate a venture how they like.
However, with a franchise business, there is just not as much flexibility – the franchise framework has already been established as effective.
The franchisor will require you to follow their system, because a deviation could massively reduce the chances of success.
How much you have to follow the framework will depend on the franchisor, but the most likely limitations will involve those that have been proven to produce income.
Franchisors will take your thoughts into account though, and most franchise parent companies do encourage suggestions and ideas.
This means that although there is not quite as much freedom as a start-up, there is certainly still a lot of autonomy and room for creativity. A key example of this is the concept of the Egg McMuffin, which was actually created by a franchisee.
4. You are more likely to succeed
A tried-and-tested model doesn’t necessarily equal success, and you certainly cannot expect a franchise business to be infallible.
As the franchise will have already gone through a great deal of trial and error, you will be trained on the common pitfalls that you may experience, meaning that your business is likelier to not make the same mistakes.
Although businesses will make fewer errors with more experience, getting things wrong is a continuous part of any business. You will find that this will also be an element of franchising.
As well as this, a franchise business can only be successful if you make it so. You will find that you need to have five key qualities in order to run a great franchise, including drive and commitment.
However, it is important to remember that the franchisor will be there to help you if you do have problems – they’re not only dedicated to supporting you, it’s also in their interests that you overcome any obstacles and produce a prosperous business.
5. It will take less time to grow
It could certainly be argued that franchising puts you on the path to business growth, but this does not necessarily mean that it will take less time than a start-up. Like your chances of success, the growth of a franchise depends on how much you put into it.
You will need to take the time and effort to ensure the business’ growth, otherwise it will stagnate. Although there are franchisors that allow absentee owners, maintaining control and managing the business is still just as important.
You will need to have someone in place that will make sure that the business is in a constant state of improvement and expansion.
It is important to remember that a start-up will need to build their brand, whereas a franchise business benefits from an established name and reputation.
This means that targeting your market will be much more straightforward with a franchise, making it most definitely a worthwhile investment opportunity.
A franchise business opportunity for you
It is unwise to believe these common misconceptions; franchising does bring with it a huge number of advantages, especially if you are more interested in running a business than a venture of your very own.
It is imperative to remember the basic of principle of running a franchise business: you just simply cannot rest on your laurels.
If you are interested in buying a franchise business, it is important to remember to look at those that are clearly well established and have been shown to work.
Although a franchise business cannot be assumed to be successful, it is certainly more likely with a franchisor that has demonstrable prosperity.
Rainbow is one such highly reputable franchisor. Providing specialist cleaning restoration services, working with us could be the perfect opportunity for you.
To find out more about the franchising opportunities we have available, head over to our Next Steps section to book in a call.