Is Buying A Franchise a Good Idea?

[brianmay06]

This is a question that I wonder about for several reasons. First, I bought a franchise about two years ago and I must say I definitely have mixed feelings. I also have subscriptions to all of the magazines that talk about the explosion of franchises or the top 100 or 500 franchises and I wonder if it is a good idea or are the only people that are making money are the ones selling franchises.

I know I have read several articles of franchises where the franchisees were losing evrything, but it appeared that it was a good franchise to buy based on the different magazine articles. The franchise the article named specifically was the UPS store, but I wonder if this is the same results for many other franchises. I am very interested to get some feedback on what some other people have experienced.

A little more about my franchise is I think it is a good franchise, but when the franchise does not have such a strong name nationally or maybe I should say is still building its reputation nationally, a lot of money, time, and effort are spent by the franchisees to develop those local markets. So is the benefit of buying a franchise there if building the local market is solely your responsibility?

[PMcDonald]

Do not take this personally, however I think that buying a franchise is like buying a job. You owe a huge amount of royalties to the Franchisor as well as a precentage of your revenue, you are typically not turning a profit for a few years and you are busting your tail doing it. Plus, you are told almost exactly how to do everything and must comply with the Franchisor's rules, methods of operation, etc.

Obviously, there are some advantages i.e. turnkey operation, ongoing training and support (in most cases), 5 year survival rate, etc.

I am a huge proponent of having multiple streams of income i.e. passive/residual as well as active income so that is a large factor in my feelings towards a franchise as well. Your success in a franchise is 100% determined by how many customers you can get in the door.

Many people do succeed with owning a franchise, but at what cost? Sometimes hundreds of thousands of dollars in initial investment and 60-80 hours of their life each and every week.

I do hope this is not the case for you Brian and that you do experience much success without having to put in an inordinate amount of hours, however franchising just is not my cup of tea

[Baltar]

I agree with what PMcDonald said. A franchise provides you with:

• A system that has been determined to work well
• Help in choosing a good location for the business
• Training and instructions on running the business
• Brand recognition (in most cases)

In return you have to hand over a lot of money and give up a lot of control and decision making. You're basically paying to reduce your risk, perhaps by a very large amount, but success still is not 100% guaranteed. Wikipedia has an article on franchising which lists some advantages and disadvantages of buying a franchise.

Originally Posted by brianmay06

A little more about my franchise is I think it is a good franchise, but when the franchise does not have such a strong name nationally or maybe I should say is still building its reputation nationally, a lot of money, time, and effort are spent by the franchisees to develop those local markets. So is the benefit of buying a franchise there if building the local market is solely your responsibility?

Brand recognition is definitely one of the major benefits of a franchise. Even more importantly it has to be positive brand recognition. In other words, don't by a Wal-Mart franchise. It is of course possible to succeed without brand recognition, but in that case the only advantage you have over other local businesses is the training and support from your franchiser. In that case you're also doing extra work that benefits the franchiser more than it benefits you (by helping them expand brand recognition).

[salamat]

I own and operate an "UnFranchise" business its a system provides the benefits and support of franchising without the weaknesses like fees, monthly royalties and territorial restrictions.

Its a stable and lucrative business plan – an UnFranchise business features are:

• Systemization, standardization and uniformity
• State of the art management systems
• Merchandising and marketing tools
• Growing visibility
• Multiple business locations
• Cohesive training and support structure
• Minimal startup costs
• Little to no risks

More Info here...
YouTube - Market America UnFranchise Business Development System

[Waffle]

I will say it's a good idea for a business but maybe a side business other than your own successful business setup.
An additional income.

[Milo Riano]

Franchises could help you cut your losses. Why struggle when franchising is like outsourcing your weaknesses from a single resource...

[Lucas]

Originally Posted by salamat

I own and operate an "UnFranchise" business its a system provides the benefits and support of franchising without the weaknesses like fees, monthly royalties and territorial restrictions.

Its a stable and lucrative business plan – an UnFranchise business features are:

• Systemization, standardization and uniformity
• State of the art management systems
• Merchandising and marketing tools
• Growing visibility
• Multiple business locations
• Cohesive training and support structure
• Minimal startup costs
• Little to no risks

More Info here...
YouTube - Market America UnFranchise Business Development System

Thats pretty interesting. How much do you work a week? While I like the idea of working from home, I have other things I like to do, and am not interested in 50+ hours a week. The other negative is that the UnFranchise URL in your signature is broken, and that doesnt reflect well, hehe.

[ahimel]

I'd say it depends on what your goals are.

Is your goal to do something you enjoy? To have cashflow from a business you can ignore? To learn more about business/business building?

I've thought about franchising several times, and have rejected it because I'm most excited about building the business. I want to see if I actually can create an entirely new entity that can go on without me.

But if you just want money without effort, franchises have the best chances of succeeding. Not that buying and setting up a franchise isn't effort, but you get help, and if you do it right you can ignore it thereafter. When you build your own business it's more like 24/7 emergencies for 3 years straight with no guarantee that you'll even have a positive net worth at the end. So I guess many franchises are just as much effort, but far less stress.

But if you need money quickly, franchises are not the way to go. They have huge set-up fees, and take a lot of your up-front revenue. It could be a little while before you start to see a profit -- a couple months at minimum, and a couple years is not out of the question. Whereas my roommate built a computer-repair "business" that was profitable on the first day -- he spent $50 on a hard drive, and got $150 for installing it in a computer.

If your intention is to buy a job rather than a passive-income generator, then you have to consider your personality type. If you really like (for example) fixing motorcycles, but detest advertising and paperwork, then franchises are definitly the way to go. It won't eliminate the need for accounting, but it will make accounting as brainless and painless as possible.

But if you're the sort of person considering starting your own business instead of just getting a job at (for example) Bob's Motorcyle Repair Shed, there's a good chance that you don't like having people tell you what to do. In which case a franchise is a terrible idea -- they're telling you what to do all the time.

So what do you want out of a business? That will determine whether franchising is for you.

(I didn't vote in the poll, since I have no personal experience with franchising.)