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John P. Hayes, Ph.D.
Maybe you've thought about buying a franchise but you never seriously
considered it because someone told you it's too risky, it's not a good idea, it's for rich people,
or it's for people other than you...Unfortunately, there's a lot of information about franchising
and much of it is wrong. Perhaps the information below will help you think differently about
investing in your own franchise.
Franchise Myths
"The franchisor will make you do everything their way. They'll
take away all your freedom."
What does that mean, exactly? It would be interesting to call a
successful franchisee and ask him or her, "Does your franchisor ever allow you to make a
decision on your own?" If you think franchisors make all the decisions for franchisees then you
will be surprised by their answer. Yes, the franchisor will force the franchisees to conform to
standard operating procedures. The franchisor will control what you sell, what you say, what
you wear, how, when and where you operate the business. It's all part of branding, which is
part of marketing, which is what makes money! But franchisors do not take away their
franchisees' rights to make all decisions. There are plenty of decisions every day to be made
at the franchisee level. Just ask successful franchisees. Many wish there were fewer decisions
to make!
"The franchisor charges huge fee so you're just making them
rich and not yourself."
Really? Are there no wealthy franchisees anywhere? Yes, every
franchisor requires you to pay fees, including ongoing royalties. And if they're not fair, why
do people agree to pay them? Franchising is a business and a franchisor must make a profit.
However, franchisors also need profitable franchisees. Otherwise, who's going to pay those
fees? Unsuccessful franchisees don't last long. It's just silly to say that the fees make the
franchisor rich but not the franchisee. When it's done right, franchising is successful for
both the franchisor and the franchisees.
"You can't sell a franchise. You don't own it. Once you buy
it, you're stuck with it. Who comes up with this nonsense?"
Of course you own it. You will sign a contract that gives you
ownership to a license to operate a specific business. You will not own the trademark, the
brand, the operating system, or anything else. Your license grants you the opportunity to build
a successful business using the franchisor's marks, training and support. And unless your
franchise agreement says you can't sell it, assign it, or transfer it, you certainly can. I've
never seen a franchise agreement that prohibits the franchisee from selling, or what's commonly
called transferring the franchise. You can also make a profit when you sell-- thousands of
franchises have done so in the last 50 years!
"If you're successful the franchisor will take the business
away from you, or they will compete with you."
And franchisors will do that because . . . it makes sense for them
to shoot themselves in the foot? Or they like to go to court and defend themselves against
lawsuits? Franchisors and franchisees sign contracts that spell out their legal relationships.
Sometimes the relationships are violated by both franchisor and franchisee. But people that
consistently violate franchise contracts don't remain in business very long. A franchisor lives
and dies by its reputation. You can find out about scoundrels in advance of investing with them
and avoid them!
"The franchisor will just take your money and run. They won't
teach you anything or help you set up a successful business."
Then why would you give them your money in the first place?
There's homework to be done before you invest in a franchise. Disclosure laws require
franchisors to share information with you before you invest. If you do your homework you can
find the right franchise opportunity.
Franchising is not perfect. It is not
always successful. Some franchise companies fail. However, when a franchise goes bad, it's usually
the fault of the people involved and not the fault of the concept. Franchising works. It's the
safest way for people to start a business. It may not be right for you, but don't be fooled by
these myths.
 John P. Hayes, Ph.D., author and speaker, has
written the Franchise Pre-Investment Checklist to help you thoroughly research franchise
opportunities. A 30-year franchise veteran who has owned franchises and was the CEO of a major
franchise company, John is perfectly suited to help you with your franchise decisions. He
offers a variety of free reports, teleconferences and seminars to help you decide if you
should buy a franchise and if so, which franchise to buy.
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