Does Owning A Franchise Guarantee Success?

[blogdog]

Originally Posted by orion_joel

plus make a nice profit on these sales, and then make an on going 2-10% of revenue of all the businesses...

..and that's off gross, not net! Which can really be win-lose. As a franchisee, you can be losing money and the first thing you have to pay is the franchise fee.

Also, that's usually not the only profit source. Franchisors make money all kinds of ways off the franchisees, through products, leases, training, extra consulting and on and on....

Which is cool. I'm not saying they shouldn't make money nor am I beating up franchising here. Obviously, there are good ones that are extremely successful and have great programs for the franchisees. A potential investor should look at the big picture and decide if it makes sense for them to become a franchisee.

[orion_joel]

Yes looking at the big picture, and doing your own due diligence and market research in the area that you are planning to set up is essential. There are to many franchises that think a good location for a franchisee is any major shopping center. Which may to some extent be true, however the one thing they may not sure is how many similar businesses are in the center. Or maybe the only vacant store is in an area that doesn't get much passing foot traffic.

While a franchise is good, because of the amount of knowledge about the business they give you it is worth looking to know even more before you even think about starting. Especially the things that they may not think to share with you. eg What are the major downfalls of this business? How many franchisees are operating profitable businesses? Make sure you take up the offer to talk to as many existing franchisees as possible.

Franchises can be successful, in fact maybe a lot more so then a self started business, only if you take the time and know where you are starting, what you are getting involved in and most importantly knowing where you are going.