Franchising isn’t a new phenomenon. The first franchises in the United States date back to the mid-1800s. Today, franchising is a major contributor to our national economy, and there are franchise models from which to choose in nearly every sector. If you’re still afraid to open a franchise location in spite of the business model’s long, time-tested history, let’s take a look at some of the fears you may have so we can help you put them aside.
Fear of Investing in the Wrong Concept
The sheer number of franchise models available today can make picking the right one a daunting task. You can lessen the fear of buying into the wrong franchise by thoroughly evaluating your desired investment level, skills, and expectations before you begin looking at offerings. You can also get the advice of an experienced franchise broker to help guide you in making your decision.
Fear of Not Finding Adequate Funding
As with any new business, you’ll likely need financing to open a franchise location. If you decide to start your own independent enterprise, you may have a difficult time obtaining a loan because lenders want to see several years of financial statements. It’s often easier to find funding when you’re buying a franchise. Your franchisor may offer partial financing, or it can point you toward sources that have funded other franchisees in the past. You may also discover that lenders are more willing to extend a loan for a proven, well-established concept.
Fear of Losing Independence
One of the most common misconceptions about franchising is that the franchisor will control every aspect of how your business is run. The reality is that although a franchise company expects its franchisees to operate within its established framework, there’s lots of room for individuality when you’re running the business. When you open a franchise, you’re getting the benefit of the franchisor’s business model and experience, but you’re still in control and make your own managerial decisions on a day-to-day basis.
Fear of a Lack of Experience
One of the perks of buying a franchise is that you don’t necessarily need experience in the business in which you’re investing. The role of the franchisor is to train you in all the aspects of owning and operating its business model. Essentially, you’re getting the franchisor’s knowledge and years of industry experience in exchange for your franchise fee and ongoing royalties.
Fear of the Franchise Company Failing
Investing in any type of business always involves a certain amount of risk, but you can lessen the fear that your franchisor may fail by performing your due diligence to find a well-established company with a history of steady growth and expansion. Generally, there’s a greater risk of failure with a new franchise concept that expands too rapidly.
Fear That You Won’t Make Any Money
A franchise is just like any other business; there are no guarantees that it’s going to be profitable, especially not right away. According to franchise industry regulations, a franchisor can’t tell you what to expect and can only disclose certain financial details about its business in its Franchise Disclosure Document (FDD). However, the franchisor can put you in touch with its current franchisees. Most franchisees are more than happy to talk about their experience and how long it took them to become profitable to help you make an informed decision.
If you’d like to open a franchise location with a proven track record, contact us today to learn more about a Fully Promoted opportunity!