Five Franchise Myths

Some things you may not know about franchises

Although most people are familiar with the concept of franchises, some of the myths that people take for granted might surprise you. Let's dispel some of the more commonly preconceived notions.

1. All franchises are restaurants.
   Contrary to popular belief, the word "franchise" is not synonymous with fast food. Although companies like McDonald's, KFC and Dunkin' Donuts have successfully franchised their restaurants, many franchise opportunities are outside the food service industry. Popular franchises have spun off of car repair, income tax preparation and even house painting. And of, course, maintenance and cleaning franchises.

2. Franchises are expensive.
   While many of the most popular franchises can require large amounts of initial capital, not every business opportunity is the same. There are franchises to fit various budgets. As always, though, you must decide how much you can afford to invest in your business. Make a solid assessment of your own financial situation – and then contact the franchise to get a full picture of both the expenses – and the opportunities.

 

3. One franchise is good. Two is better!
   Some people are under the misconception that if Franchise A is successful, a second one in the area is a sure winner. Not so! As with any business, a franchise works on the concept of supply and demand. If there isn't enough demand to support two stores, you run the risk of having no customers.

 

4. A successful franchisor means a successful franchise.
   Just because the head office is raking in millions of dollars doesn't mean that your business is guaranteed a hit. Although a franchise gets a lot of operational and marketing support from the franchisor, that doesn't guarantee success on the local level. No business venture is without risk. The two most common reasons franchises fail are a lack of capital and failure to follow the established franchise system.

 

5. A good idea can succeed anywhere.
   There's a reason why grits aren't commonly available in Wisconsin. Some franchises don't translate well to a given region. But for every failure, there's a success story of an underdog franchise that has successfully gained a foothold in a previously untapped market. Know your customer base and you'll have a better chance of establishing a successful franchise.