Question

Describe the ten myths of franchising.

Answer 1

The 10 myths of franchising are:-

1. Franchising is the safest way to go into business because franchises never fail.

This is a myth because, just like any other mode of market entry, franchising presents its own set of challenges and may cause the venture to fail if no addresses properly.

2. I'll be able to open my franchise for less money than the franchiser estimates.

This is a myth because, just like any other analysis, franchising costs have been analyzed according to the market and estimated to the lowest point in order to provide security in the case a process fails, thinking that there will be less investment than the estimated data is, therefore, a myth.

3. The bigger the franchise organization, the more successful I'll be.

This is a myth because as a bigger organization has its benefits, it also has its own challenges which mean that the implementation needs to be catered to the organization in question., bigger franchises have larger variables as well as they need to be able to uphold their brand value which becomes a challenge in a lot of cases.

4. I'll use 80 percent of the franchiser's business system, but I'll improve upon it by substituting my experience and know-how.

There is a reason franchising model works as well as it does, this is because the franchisor’s business system has been created in order to combat the active competition in the market as well as cater to the needs of the consumers by using the specific products the franchisor has created over the course of their entire business. Neglecting their input and experience can be a mistake and therefore this is a myth.

5. All franchises are the same.

Different franchisors have a different level of implementation, needs, requirements as well as differences based on their reach, size and implementation. Therefore, this is a myth.

6. I don't have to be a hands-on manager. I can be an absentee owner and still be very successful.

This is a myth because no business, no matter a franchise or a personally owned brick and mortar store can function without a hands-on manager.

7. Anyone can be a satisfied, successful franchise owner.

The variables in the different franchises and the different requirements do not allow for everyone to be satisfied with being a successful franchise owner.

8. Franchising is the cheapest way to get into business for yourself.

Franchising isn't the cheapest way to get into business yourself, there are different methods of indirect exporting, licensing and turnkey projects which can be cheaper based on the circumstances.

9. The franchiser will solve my business problems for me; after all, that's why I pay an ongoing royalty fee.

This is a myth because the franchisor has only shared their business model and their expertise, but, have not guaranteed any security or any such relationship unless the contract states otherwise.

10. Once I open my franchise, I'll be able to run things the way I want to.

The franchise model doesn't work this way. There is a strict policy that is in place which requires a specific business model to be followed. You can change how you follow the model but not change the model itself.