Debunking the 9 Biggest Franchisor Myths

Franchised businesses will grow by 1.5% throughout 2020. 



Despite an uncertain economy caused by the COVID-19 pandemic, the franchise industry continues to grow fast. Chief in popularity for franchising are personal service stations (such as a car wash where you do everything yourself) and restaurants.

However, with an increase in popularity also comes a rise in false information and franchisor myths. If you're considering buying into a franchise, you'll need to know the hard facts before jumping in.

This article will debunk some common myths and provide franchise facts that will be helpful in guiding your decision.

What Is a Franchise?

According to the International Franchise Association, a franchise is a means for the distribution of products or services. The franchisor is the one who establishes the brand name and business system, while the franchisee is someone who buys in for the right to do business under that name and system.

Take Pizza Hut as an example. They are a fast food restaurant franchise with establishments spread all across the United States.

Based on what’s provided on their website, you must pay an initial fee of $25,000 to buy-in. After that, you must pay a monthly service fee (royalties) that amounts to 6% of your gross sales.

While the amount you pay will differ from franchise to franchise, the need to pay a buy-in fee and royalties will remain. You will want to be sure to do your research and know the costs before you dive in.

Franchise Myths

If you’re thinking of franchising your business, you need to be able to separate fact from fiction. Let’s dive into some of the most common misconceptions surrounding franchises. 

1. Franchises Are All Fast Food

If a business can be replicated in a new location and flourish using the same business model, it can become a franchise. While fast food is a leading contender of the franchise system, there are many other business types to be found. For example, the UPS Store is ranked at #5 for successful franchises of 2020. This is but one example and there are many other types of businesses that aren't fast food that are flourishing under the franchise business model.

2. A Franchise Is Easy Money

Like with most things, you'll get what you put into your franchise business. While the franchise will provide you with a business model to follow, it falls to you to implement things correctly and help it succeed. You will need to work to make improvements and help your business grow. However, it is true that oftentimes running a franchise has a higher chance of success than trying to start your own business from scratch.

3. Franchisors Accept Anyone

Every franchise has its own requirements for a franchisee. Franchisors do their best to bring on franchisees who will ensure the continued success of their business. Most franchises will run a background check, a credit check, and also ask for proof of financial stability and the ability to cover buy-in fees.

4. Franchises Afford No Independence

Many believe that the franchisor makes all the decisions and that you're essentially just an employee beneath them. This couldn't be further from the truth. While there is a basic system in place you must follow, there is a lot of flexibility in who you decide to hire/fire, how you advertise, and how you run the store.

5. Only Fast-Growing Franchises Are Worthwhile

It's never a safe bet to try and chase after trends. Odds are that by the time you invest, that growth spurt could already be over. Focus on buying into a franchise that you believe you'll enjoy. You want to find one that meets your budget, needs, and skills.

6. Franchisees Don't Own Their Business

While a franchisee doesn't own the brand, they do own the business they bought in for. You can choose to build your business and watch it flourish, or build it up and then sell it.

7. Franchises Are Only Big Business

While the scale of a franchise might be national, a franchisee is a small business owner. Most franchisees operate on the local scale, working to grow their singular business, even while the franchise system itself might be on the international scale.

8. Franchisor Does Everything

While the franchisor might offer you training and support in the way of marketing and a business plan, as the franchisee you are still a small business owner. You will be responsible for growing your business and handling the day-to-day operations.

9. Investing In a Franchise Is More Expensive

There is some partial truth to this. You might pay more upfront for a franchise license than you would to start your own independent business. However, you should also see a fast return on your investment due to the franchise's brand recognition, as well as assistance with marketing and business plans.

10. Franchisees Have to Work 24/7

Every franchise is different. Since a franchise offers a proven business system, this frees more time up for the franchisee to work toward growing profits. Many franchisors want investors who will hire staff and management to handle the daily operations and instead allow you to focus on other aspects of the business.

Don’t Fall for Franchisor Myths

There is an overabundance of franchisor myths out there. Do your due diligence and research the franchise you’re interested in. As long as you do this, you’ll be a step closer to investing in a franchise that suits your needs and to being successful.

If you’re interested in growing your own business into a franchise, consider letting professionals help you plan everything out. Experts can help you map out a detailed growth strategy, create an assessment report, and more!

Grow Your Business Wisely

We hope this article on franchisor myths proved useful. When you’re looking into turning your own business into a franchise, don’t think you have to go it alone. There are professionals who can help guide you and improve your odds of success.

If you’re ready to talk business, let Strategic Franchise Development help. We help entrepreneurs prepare their business to turn into a franchise. Contact us today!