franchisee, franchise business

For many people buying a franchise business is a great way to start their own business and work for themselves, and at the same time benefit from the support and clout that comes with the franchise brand. As I explored in my blog post Is Buying A Franchise A Good Idea?, there are many good reasons to think seriously about a franchise, compared to starting a business from scratch or continuing to work for someone else.

However, it’s not for everyone and therefore it’s really important to do some soul-searching to decide whether you have the right temperament to be a franchisee.

In this post I will play devil’s advocate, and explore why being franchisee is not for everyone. That’s not to say I’m anti the franchise model! Far from it, my own company Your Business Hub is a franchise business with franchisees running business hubs in their towns. But I do think it’s really important to understand what you’re letting yourself in for, and whether this type of business is right for you. After all buying a franchise does come with a price tag and could be an expensive mistake if you don’t have the right temperament.

5 Reasons You Shouldn’t Become A Franchisee

  1. You’re worried about risking your money

Naturally anyone looking at investing in a business will be cautious whether the numbers add up. It’s a very important lesson in business. If you’re worried about a particular franchise business and the numbers aren’t convincing, then it’s probably a good idea to walk away unless you feel you can manage the risk.

If the numbers look good and you’re still concerned about investing your money, that’s normal too. Make sure those numbers are realistic and you feel confident that you have the funds, time and energy needed to capitalise on the business.

However, if you’re worried about investing your money because deep down you don’t really like the idea of paying someone else so you can run a business, franchising probably isn’t a good fit for you. Even if you can get over that initial outlay, make sure that you’re also happy with any franchise fees or royalties the company may take. If you can’t see what the value is that you will derive from owning a franchise, and paying royalties, either the franchise opportunity is wrong or you should look for a different way of starting a business.

  1. You’re looking for an easy option

While buying a franchise is generally much easier than starting a business from scratch, it’s not a get-rich-quick scheme and requires just as much hard work and commitment as any other business. There are many advantages that make it easier – often readymade customers, brand recognition, processes and systems already in place, the collective buying power of a larger company, back office and other business support etc. – but you still have to do the work!

Don’t make the mistake of thinking the business will run itself, or that the franchisor will provide you with customers and sales.

  1. You have entrepreneurial ambitions

Running a franchise business is an excellent way to learn the ropes and get valuable business skills, but remember the business model is not yours. The franchisor may welcome your input for improving aspects of the business, but generally they will want you to focus on developing your franchise using their processes and framework. The overall business concept is not yours to tinker with!

People buy franchises because the franchisor has developed a business model that works. If the franchise model doesn’t offer you enough scope to develop the business as you see fit, or if you want to be more involved in strategy and business operations, then starting up your own business is probably a better route.

  1. You don’t want to answer to anyone else

If you’re motivated to run your own business because you don’t want to work for The Man, a franchise is a halfway house, not the whole ‘I’m the boss of me’ dream. Yes, profits are yours to keep (after royalties). Yes, you can manage your own time and achieve a better / different work-life balance. Yes, you can do something you love (if you buy the right franchise business) and use your talents more productively. However, you are still accountable to someone else.

The franchisor has a vested interest in your business and will be expecting results. As a franchisee you represent their brand and are also part of the machine that drives revenue for that business. As such most franchisors set performance targets to ensure that you’re maximising the potential in the business. These may be negotiable at the start and will reflect the opportunity and your business plan. If you fail to meet these targets, the franchisor will start a process of escalating remedies to address the issue – ultimately ending in termination of the contract.

On a positive note, accountability is not a bad thing. Remember that even if you own your company outright, the chances are you will still be accountable to someone else. Your partner, your children, your bank manager, your employees etc. In one way or another they all depend on you to hit targets, just like a franchisor does. 

  1. Lack of personal support

Any business owner needs a great support network. Fortunately with many franchises support comes in the form of a franchise network (other franchisees) and hands on business support and advice for developing your franchise. However, most people also need personal support from friends and family. This is your team, the people who will listen to you, build you up when you’re feeling down, and talk sense into you when needed.

Your team, whether that’s just a close friend or a whole army, need to be supportive of your business venture. It’s the same whether you’re starting a business from scratch or buying a franchise. However, the franchise model can divide people and if someone on your team has a negative attitude towards the concept it can be quite damaging.

Before buying a franchise, make sure your team is on side. If you can convince them it’s a good idea – the people with your best interests at heart – it’s a good indication that the opportunity is right for you. If someone important to you is not supportive, you will need to weigh up whether you can proceed without their backing.

Have you got what it takes? For many people the franchise model offers distinct advantages over starting up a new business, but you do need to have the right temperament and the opportunity needs to be a good fit for you.

To find out more about Your Business Hubs and the support they offer business owners (including franchisees) click here.

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