Exploding the Most-Common Franchising Myths

There are no overnight millionaires in the franchise game. If you want to succeed, you may have to stop fantasizing and start putting in the hours.

Everyone considering buying a franchise needs a myth detector. There's wisdom in the old saw that if something looks too good to be true, it probably is. While some people may say they got rich quick, chances are that you're not seeing the true amount of work behind their success, or the circumstances they may have inherited. At the core, you may do well in owning a franchise, but you'll need to hop aboard with both eyes open, dispel your fantasies, and roll up your sleeves.

Examine your expectations for these common flaws in entrepreneurial thinking:

1. A brand name carries instant recognition and brings immediate success.
   Just because you've signed on with a renowned fast-food franchise with international advertising and instant name recognition, you can't automatically assume your profitability is ensured. Has the region become oversaturated with franchises? Are your business interests and skills well matched with the operating rules of the franchise? Have you surveyed other owners in your area to see how well they're doing?
2. The most-expensive franchise must be the most-profitable one.
   Not so. Since the more expensive franchises require a larger initial investment, you may not grow profits as quickly as you think. Just because you're sinking a lot of capital into your enterprise does not guarantee that you'll have an instant money-maker without doing the legwork. Are your personal business talents well suited to operating the franchise model?
3. The large number of franchises I see must mean that they're successful.
   You can't see anyone's ledger from the street. Some franchises fail when they're not well-financed and others simply collapse from poor management. It pays to evaluate franchisors to determine their requirements--and to see how well a franchisor winnows out applicants based on access to capital and the relation of the prospect's management acumen to the business model.
4. A big-name franchisor will teach me how to succeed.
   Studies show that the quality of the relationship between the franchisor and franchisee does correlate with profits. If you're smart and choose correctly (or get very lucky!) your training will help--but there's no guarantee of success involved. The truth is that franchises can vary from street corner to street corner. While you may be sent to training courses on the franchise products and operations procedures, it won't guarantee a long line of customers at your door. Is your region over saturated? What kinds of consumers live or work in the immediate area? What's the competitive landscape look like?

You can't learn everything in a classroom. Again, the difference between success and failure have everything to do with how well your personality, business skills, and entrepreneurial dedication to the enterprise matches the franchise business model.

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