Reasons Why You Should NOT Buy a Franchise - From a Franchise Coach
November 17, 2014
By Brigitte Betser
You read the headline right, I’m going to tell you why under what circumstances you should not buy into a franchised business concept. Why am I telling you this? For some people, owning a business (franchise or otherwise) is probably not the right life choice. For those born to be entrepreneurs, owning a franchise business is probably not the right choice. But for some, franchising can be the perfect choice for a new career, a different investment, or both. Here are some good reasons NOT to buy a franchise (or maybe any business):
YOU NEED AN IMMEDIATE PAYCHECK Rarely does a new business start cash flowing on Day One. You need to be realistic in terms of projecting when you’ll be able to draw a paycheck, and make sure you have adequate reserves, or another source of household income to sustain you and your family for at least 6-12 months.
YOU’LL BE RISKING EVERY PENNY YOU HAVE TO LAUNCH THE BUSINESS The pressure and sleepless nights will not only be detrimental to your health, but can also lead to poor judgement and decision-making which will detract from your likelihood of being successful.
YOU THRIVE ON 100% CONTROL The key to success in franchising is consistency and adherence to a proven system. Your customers know what they are getting before they walk into the door, whether it’s a product or service. It doesn’t matter who owns the McDonald’s, you know what the Big Mac tastes looks and tastes like. You are buying a name brand and an operating model. You cannot change that brand. “Oh, the Big Mac isn’t selling well, but let me call it the Mega Mac – that will change things!” There may be certain vendors, supplies and programs that you have to stick with as part of the franchising agreement. If you think you have invented a superior product and/or business system, then perhaps you should consider starting a business from scratch, as opposed to joining a franchise system.
YOU ARE LOOKING FOR A LIQUID INVESTMENT You are making a commitment and a significant investment when buying into a franchised business concept. This cannot be liquidated on the spot, should the need arise. Remember, just like most businesses, it may take you time to make back your initial investment or cash out if you decide to sell.
YOU DON’T HAVE A COMPELLING REASON FOR BEING IN BUSINESS FOR YOURSELF It’s not enough that you’d think it’d be fun to “Be the Boss” or you have a passion for a particular product or service. Business ownership is a huge commitment, and should only by attempted by those that have the transferable skills necessary to be successful, and have sound reasoning for taking the risk, such as a resolve to never working for someone else again, or not wanting to have your money subject to the roller coaster stock market.
At FranNet, we believe that business ownership, whether through franchising or otherwise, only makes sense for the select few. That being said, we’ve seen lots of folks that have what it takes, including a compelling reason for being in business, achieve freedom, independence and fulfillment by selecting and managing a franchise that FITS their goals, transferable skills, preferences and lifestyle requirements.
About the Author:Birgeitte is Helping Professionals in Michigan Transition into New Careers, including Franchise and Small Business Ownership
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