Becoming a franchise owner can be a lucrative, fulfilling career. You don’t have to look too hard to find successful people who, when they were business newbies, started out with one hands-on franchise – and now they own several.
And that is one of the very valuable functions that franchises serve – they’re a fantastic way for people who have the drive and intelligence to be good at business to get the training and experience they need to thrive.
A franchise is a training wheels kind of business. If you don’t know the first thing about running a business – no problem. The franchisor will train you, provide you with the mandated tools and appliances (at a cost) and give you the rulebook you’ll get to play by.
It’s just like following a recipe.
Franchise businesses also contribute a lot to the wider community – many kids get their first jobs working one-on-one for a franchise owner.
There can be pitfalls to being a franchise owner
I’ve read three news articles in just four days that spell out some of the ways that franchising can suck—if you’re not careful.
Two of the articles talked about car dealers who are getting their franchises back from the auto companies after congressionally mandated arbitration.
The third was about a lawsuit between Burger King and a huge number of its franchisees. The franchise owners were upset because Burger King unilaterally changed their compensation for soda rebates.
These articles point out some of the things you need to look out for when you’re researching franchises:
- Under what circumstances can the franchisor take your business away from you? Do they have to compensate you if they do? How much will you get if this happens?
- How much input do individual franchisees have over policy changes that affect their bottom lines?
Before you start| Know how much control you have
Before you sign up to be a franchise owner, you need to know just how much control you get to have over your business.
The support you get as a franchise owner can cost you your independence. And even if you’re a newbie, you’re going into business for yourself because you want to be your own boss, right? Right.
Now, you could possibly get around these issues by getting in on the ground floor of a new franchising opportunity. You know, get in when the company needs you more than you need the company. That will give you some leverage over just how much autonomy you’ll have and how much power you’ll have in dealings with the franchisor.
But be careful if you go this route. The very fact that you’re dealing with a new franchisor means you’re taking on a bit more risk than, say, if you open up a Burger King.
So yes, go ahead and look deeply into franchise opportunities. But be sure to ask detailed questions about how much control you’ll have over your business and whether the franchisor acts like a partner or like a boss when dealing with its franchisees.
Interview other franchise owners. Take a hard look at the growth rates of individual stores. And for God’s sake, make sure you understand every single word of that franchise contract before you sign it.
Franchises are like most other small business opportunities. There are good ones, bad ones, and ones with mixed records. But it all comes down to what you want and what will work for you.
So be careful. Be choosy. Then go out there and make it happen.
