List Your Business

Wrong Reason to Buy A Franchise

27 People have recommended this article.
Forget all the wonderful franchise opportunities. Like I said, choosing and buying a franchise is easy; choosing the right one with the right reason is challenging.
Now, I recommend you to sit down and start to think – do I have the right reason to buy a franchise?
While you are at it, read my lips (or rather, read these words): Don’t buy a franchise for the sake of profitability.
Franchise is a real business (believe it or not, some consider franchises as magic money makers), and business ALWAYS involves risks. When some franchises pitch you that franchise failure rate is minimal, stay away from the franchises. Franchise units share a fair amount of failure risks, despite being lower than the non-franchise business.
If you aim for profitability, you will disappoint yourself. Not because franchises don’t make enough profit, but because what a franchisee should have is the ability to commit and share vision with the franchisor. Following guidelines and practicing what’s best means less-you and more-us. Profitability comes AFTER you are able to keep up with your franchisor. If you want to do things your way, DON’T buy a franchise.
Here are some notes to help you ponder your options:
  • Franchising can make you rich IF you can do things your franchisor way.
  • When making a financial projection, consider applying a ‘multiplier’ to your franchise financial forecast. If you aim to make $100,000 in sales, you need to up that to $125,000 with regard of franchise-related fees, such as royalty and marketing fees. Your franchise unit HAS TO make more than the comparable non-franchise unit in your industry with all the fees incurred.
  • When buying a franchise, avoid thinking like an investor – put your money in and the profit will come to you automatically. Franchise is typically a ‘get-your-hands-dirty business’, and most franchises don’t allow you to be an absentee owner.
  • Buying a franchise is buying the brand name and the system to help you succeed – buying a franchise is NOT buying a cash machine in which profitability can be guaranteed and is a sure thing.
  • Franchising is about building relationship between you and your franchisor – if you don’t like to take professional advice and be guided on how you should run your franchise unit, you should start your own business, instead.
Franchising is great for the right people. Buying one with the wrong reason will only make you miserable (and financially strained), and this is not impacting you, but your franchisor and the other franchisees, as well. Think about it.

*Information above was gathered from written by Ivan Widjaya.

This content was sponsored by:

Diamond Physicans
8222 Douglas Ave
Dallas, TX 75225
Drytech Restoration Services
80 Central Ave.
Spring City, PA 19475
Crescent Movers
6321 N. Cicero Ave, Unit A
Chicago, IL 60646
Turtle Roofing
8404 Sterling St #1
Irving, TX 75063
Johnson Construction Company LLC
1707 N West St.
Lima, OH 45801
Own A Quiznos
7595 Technology Way
Denver, CO 80237
Keys to Assessing a Franchise Business Plan
How to Avoid Buying a Franchise that Might Go Under
Bank Loans for Buying a Franchise
10 Common Mistakes of Prospective Franchisees
Negotiating The Franchise Agreement
Do Franchises Limit Competition?
When to Run from Your Franchise Broker
Factors That Affect A Good Franchise Site Location
Getting The Most Out Of A Franchise
How To Buy A Franchise
Pros and Cons of Franchise Businesses
A Checklist of Questions to Answer Before You Buy A Franchise
Franchise Legal Considerations
What is Franchising?
Five Franchise Tips
Franchise Tips
Should You Buy a Franchise
Starting A Franchise
What is Franchising?
Before You Select A Franchise...
Successful Franchising
How to Choose an Ethical Franchise
7 Ways to Grow Your Franchise using the Internet
Pros & Cons of Buying A Franchise

In your area: