Franchises offer a lot of benefits for entrepreneurs. The biggest benefit is the “system” that a franchise develops and then sells to franchisees. With a franchise, you get instant name and brand recognition, and the assistance of a team or professionals who have “been there, done that.”
But all that glitters is not gold in the world of big time franchises. Put on your thinking cap and ask yourself, why would a company wish to franchise its operations? Why would they give away their most closely guarded secrets, their unknown formulas for success, and their highly classified and confidential information? For money, of course.
Back several years ago I filled out all the necessary paperwork to get a Uniform Franchise Offering Circular from a well known sandwich franchise. After they crawled over my bank accounts, my credit history, my assets and liabilities, my grades from elementary school, and my sister’s cat’s first owner’s grandfather’s ex-football coach’s nephew twice removed, they told me everything I needed to know. Sort of. Most of what I learned, I figured out by talking to other franchisees, and what I learned made me say NO!
Why I didn’t buy a franchise
You have to pay to play
The up front franchise fees were horrendously large, and that was just for the “privilege” of using their name. Before you ever walk through a potential site, before you taste the first dollar, before you even open a business checking account, that fee has to be paid. It can be a large six figure number for the larger franchises and in many cases, it has to be paid every few years, just to maintain the “relationship.”
