This year could be one of the best times for the franchising industry. According to the International Franchise Association, the number of establishments could increase almost 2%. It’s a significant improvement from 1.6% the previous year. Its contribution to the U.S. economy would account for 3.1% of the country’s GDP.
Many, however, are still having doubts about franchises for one reason: there are wrong ideas. The following may help correct them:
Myth #1: You don’t need help in finding a franchise.
Is it easy to find a franchise? The answer is yes. The bigger question, though, is whether it’s the right fit for you.
A report suggested that more than 15% of the SBA loans for a franchised business between 1991 and 2010 failed. From 2006 to 2010, the average rate was even higher at 19%. Upon analysis, they found that there’s a significant imbalance when it comes to authority and power between the franchisers and the franchisees.
Franchising is about building a successful, healthy relationship with both parties. A franchise broker can promote that by helping you find the perfect match.
Myth #2: Franchising is expensive.
Opening a franchise is one of the easiest ways to have a business. You already have a brand, and if you choose your franchise right, you receive a lot of support and training from the owners.
Franchises do come with a price, and in some cases, they are hefty. For example, to own a McDonald’s you need to have no less than $750,000 as liquid assets. You also need to pay franchise fees and a percentage of the gross sales. The latter can be as much as 12%.
It doesn’t mean, however, you need to spend tons of money to begin. One of the best things about franchising is the options available. You can find one that can cost less than $25,000. Some of them may not even ask for a franchise fee.
More than anything, the price must not be the only criterion in choosing a franchise. Other factors are the products, franchise support, and brand.
Franchising doesn’t spoon-feed you. It still needs commitment, business acumen, training, patience, and innovation to make it successful. Nevertheless, half of it is choosing the right one. Pick the ideal franchise, and you’re one step to winning it.