Why Franchising Is Not For Aspiring Entrepreneurs

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The franchise model leverages a system and business approach to help entrepreneurs start and run their own businesses. But a franchisee is actually more of a system entrepreneur than an entrepreneur. True entrepreneurs invent a business from scratch and develop everything from scratch. Systems entrepreneurs use leverage of all types – debt, existing operating system, best practices and information – to build their business.

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There is much more certainty of outcome and less risk because you can evaluate the model beforehand to determine the strength of the model and whether it is right for you. Franchising is an incredibly successful expansion strategy for one simple reason: There are plenty of people who want to run businesses and are skilled investors and managers. But there are less true inventors in this world.

Related: Why Franchising Depends on Systems

Do you want to start a business or own a business?

The distinction is important. If you dream start A business from scratch and inventing every system and product, franchising is probably not right for you. Unless, of course, you plan to invent a new franchise concept and bring that business to market within a franchise business model. Then you build a business from scratch and create all these supporting systems and products for other people to follow. If instead, you are dreaming run and which he owns a business, where your day-to-day focus is profitability, growth, scale and impact, then being a franchisee could potentially be a great solution.

The franchise model was designed with exactly this type of operations- and sales-focused entrepreneur in mind: the systempreneur. Strong franchisees are also good at managing people, listening, sharing, learning and collaborating. They have an open mind. They see opportunities and have a can-do approach. You’ll be following someone else’s system, so it’s extremely important to make sure you’re prepared to do just that.

Related: 3 Reasons Buying a Franchise Can Be Better Than Starting Your Own Business

Are you ready to follow a system?

It is often said that franchisees are in business alone, but they are not alone. The other side of this truth is that the franchise corporate team can and will monitor your progress. Most franchise agreements require franchisees to share their financial statements and even their tax returns. This is to help the team track performance at the unit level and ensure that assistance reaches every franchisee who is competing. The system is also required to be able to report unit-level performance in the Franchise Disclosure Document if it chooses to report financial performance (financial performance representations are not required). Many scheme entrepreneurs are ready to follow a scheme, but may cringe at the idea of ​​the company monitoring their activities and reviewing their tax returns. This is part of the franchise model. Keeping the entire system healthy is also important to you as a franchisee.

Franchises also have operating rules and standards that must be followed. You agree to abide by the system standards when you sign the Franchise Agreement. Many are core to business sustainability, such as health and safety standards. However, some are related to branding standards, including the lighting and colors you may use on your business location and in advertising.

As a franchisee, I once had to spend $10,000 to move a huge wall at one of my franchise locations because the corporate approval manager wanted the site to have a special look. The location of that wall never generated a dime of income for me, but it still cost me $10,000 to move that wall. This sort of thing is part of franchising, but it can get on the nerves of franchisees. Are you ready to live by someone else’s rules and can you move forward even when decisions don’t go your way?

The operating model will also evolve and change to keep pace with changing customer demands and competition. You are expected to continue. Sometimes this means additional expense or the rollout of new systems or products that were not planned when you originally signed the franchise agreement. The ability of a franchise system to evolve with the times is important and is only as strong as the collective willingness of franchisees to follow the new system.

Related: Franchising provides owners with a proven model and opportunities to grow the system

Self esteem

The following questions and thought exercises are about you and what you are trying to achieve by starting a business. Understanding this is an extremely important step in your franchising journey. Without this introspection, you are likely to lose sight of your goals later on. Take the time to invest in yourself by really working through these questions first. Talk through your completed responses with your support system and those who know you best, professionally and personally. Are there blind spots in your self-assessment?

  • I dream more start a business or run a company?

  • Can I follow a system and playbook or do I prefer to try and change things?

  • Can I ask for help and take advice from others?

  • Am I comfortable reporting my results and being transparent about my performance?

  • Am I comfortable with the fact that the corporate team will have the final say in enforcing brand standards and that I may have to follow decisions I don’t agree with?

  • Am I prepared for a required operating model change during the term of my franchise agreement?

As you complete this thought exercise, make sure your family is on board with your desire to run a franchise business as well. If they understand your goals, they’re more likely to support you so you don’t have any last-minute surprises.

Get to the root of what you are trying to achieve. If you don’t know where you want to go, how can you make a plan to get there? Franchising is a great business model, but it must match your goals and your desired work style. Are you an entrepreneur or businessperson?

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