The general view for a lot of people is that a franchise is a lucrative answer to setting up and running a business that will reach all your financial aspirations. However, as is often the case, perception is often not always based in reality.

For some, a franchise if selected carefully can be the right route to go, but the reality is often not anywhere near the promises made by those selling the franchises.

Franchises are attractive to a lot of entrepreneurs because of their established systems, brand and marketing that mean the entrepreneur doesn’t have to ‘reinvent the wheel’. For many first time entrepreneurs who feel they do not have the necessary knowledge or experience to start a business on their own, the franchise route appears to solve these issues. After all, when you have no experience, why would you go for the trail and error route when you can just adopt someone else’s systems? That they are established and working elsewhere in other businesses will presumably reduce the risk associated with starting up an independent business.

In theory, a franchise is the answer. However, some research appears to show that as with many things there are ‘lies, damn lies, and statistics.’ Research undertaken on some of the most popular franchises appears to contradict the rosy picture painted by a number of franchise associations around the world.

As with all statistics, it pays to understand how those figures have been compiled before making an assessment on how much credibility they should be afforded and whether you should give them any consideration at all. After all, there is little point making a decision as important as what sort of business model you should adopt for your new business, based on inaccurate information!

The research contained below provides some of the financial requirements for some of the most popular franchises. If that doesn’t give you some food for thought, then perhaps you’ll think a little more deeply after looking at some of the information contained below that.

SCORE Volunteers.

SCORE’s 10,500 volunteer counsellors have more than 600 business skills. Volunteers are working or retired business owners, executives and corporate leaders who share their wisdom and lessons learned in business.

Exploring Franchising Options: Do Your Homework
By Jerry Chautin
SCORE Counselor, Atlanta, GA; Manasota, FL; and Cyberchapter

We see franchised businesses popping up all over. Yet some of the most recognizable franchise brands are under attack in civil courts. And one of the most prolific attackers is Robert Zarco, a lawyer with offices in Miami and West Palm Beach. He goes after sellers of franchises, called franchisors, wherever and whenever they mistreat his clients. Zarco told me, “the problem with franchising is the perception of rewards is very different than reality.”

With so many franchises in the United States, you might think that these small business owners, called franchisees, are a happy lot. Not necessarily so, says Susan Kezios, president and founder of the American Franchisee Association, a trade association that represents franchisees nationwide.

She tells us that many of her members are unhappy with the franchises they purchased and would have made different choices if they knew then what they know now.

See the rest of this article here.

The Harsh Reality.

A study by Dr. Timothy Bates, a professor at Wayne State University in Detroit, found that the franchise failure rate actually exceeded 30 percent and that franchises made lower profits than independent entrepreneurs. Dr. Bates’ study also found that the average capital investment of franchisees was $500,000 compared to $100,000 for independent entrepreneurs.

Bates’ Research Underscores Three Harsh Realities
Dr. Timothy Bates
Professor at Wayne State University, Detroit, MI

Many franchisees never make much money. Average profitability is poor, especially after taking into account the purchase price of the franchise. So take the hype used to sell franchises with a big pinch of salt!

“Studies” used to sell franchises are paid for by the franchisors. Don’t mistake the information provided for balanced consumer guide information. It’s a carefully engineered sales pitch. Getting hold of the information you need to make a rational buying decision is difficult, to say the least. So use your common sense and a healthy dose of cynical discretion.

Franchise agreements always favor the franchisor. It is very easy to be swept away in the heat of the moment and get into a binding contract that is not in your best long term interests. And it is very hard to get out of a franchise agreement without taking a big financial loss. Remember, the main purpose of franchising is to make the franchisor wealthy. So be careful.

The full report can be found here.

Franchise Financial Requirements.

The following are some of the most popular franchises and their
financial requirements.

The following franchise information can be located here.

Are you still interested in a franchise?

What is certain, is there there is no less risk in starting a business based on the franchise model than starting your own independent business. However, where does that leave those would-be budding entrepreneurs who don’t have the confidence in their abilities and experience to start a successful independent business on their own?

The advantages that the franchise model offers and more can still be taken advantage of:

• established business systems that are proven and working elsewhere

• a business model that is lucrative and profitable to ensure you get a healthy return on your investment, and FAST.

• a marketing platform that allows you to quickly brand yourself whilst leveraging the experience of others in what is effective and successful

• world class training and mentorship to ensure you have the knowledge and tools to succeed

• face to face connection with the most successful multi-millionaire entrepreneurs in the industry to tap into their knowledge and motivation for success.

This kind of business system is already providing a lucrative alternative to the franchise model for many entrepreneurs worldwide. It lacks the many disadvantages of a franchise or traditional ‘bricks and mortar’ business, such as stock inventories, liabilities and of course the financial costs of a franchise.

If you would like to understand more about such a business opportunity, then please contact me for more information.