Paul Harrison, franchise director at The Travel Franchise, dispels four myths about buying a franchise
Entrepreneurship is a very rewarding and financially beneficial venture if it’s carried out successfully. But of the 62 per cent of the millennial generation that would consider starting up their own business, only four per cent actually do.
There is a huge gap in the amount of young people carrying out their professional intentions and part of this reason is the lack of knowledge about their options and the myths surrounding them.
This is especially true for franchising, which is an accessible option for those looking to be their own boss, but the business form has attracted a bad reputation due to its early practices. Ultimately, this has led to a lot of missed opportunities and potential money making.
Of course, any new business venture can be daunting, especially when you’re investing so much of your time and money into it. But it can be even more intimidating when your knowledge is based on assumptions and misconceptions.
If the research is done right before making a decision, you will come to realise every franchise is different and a lot of the myths are just that.
Every business start-up costs money. It’s true that some big names come with big price tags and start-up fees reaching hundreds of thousands of pounds, but this is because you’re paying for the big name. There are many smaller companies offering reasonable, affordable rates that are just as successful.
Franchises are also more likely to make a profitable return because of the increased probability they will survive. It’s known that 80 per cent of new startups fail within their first five years, whereas in the same time period 80 per cent of franchises succeed. Therefore, investments are statistically safer and there’s nothing more expensive than failure.
Some companies, such as The Travel Franchise, also give their franchisees an incentive to hit targets by giving them the opportunity to earn back their original start-up fee. They challenge owners to earn a certain amount of money within a specific amount of time to receive their investment back, on top of any additional commissions earned.
This can then make the start-up costs far cheaper for franchisees because they’re not paying other expenses, such as branding or experimenting with systems.
Additionally, one of the hardest things for hopeful entrepreneurs when starting their own business is finding enough capital to fund their ideas. This is particularly true for the younger generation and could explain why so few millennials are taking up independent ventures.
However, when franchising a successful business there is already a proven plan for them to follow and therefore investors are more likely to trust them, making bank loans easier to obtain.
Entrepreneurs are usually innovative professionals with a creative flair and vision of how they want their businesses to look and run. They want the flexibility to put their stamp on their own business and fear franchises restrict their independence and dictate every part of the business.
In reality, this is not the case at all. Much like costs, franchises are varied. It also depends greatly on the type of industry you’re buying into.
For example, fast food chains tend to have limited freedom because they demand every store to be an exact duplicate in terms of menu, layout and furniture. They need to maintain strong brand association.
However, many companies allow franchisees to incorporate their own ideas and innovation, because freedom is what being your own boss is all about. It’s better to think of franchising as a tool and foundation for entrepreneurs, much like supplying an artist with a canvas. The established systems can be used to build upon with individuality, rather than them doing it all for you.
This is one of the main reasons why people believe franchising has unfavourable standing in the business community.
In the mid 20th century when the concept was first trialled, companies were not completely sure how to approach the idea. They were just interested in rapid growth and saw eager franchisees as quick cash, which resulted in them selling an idea without substance. However, everything has changed since then.
Of course, buying into a business’ name is one of the biggest selling points for franchising. It brings you brand recognition and company reputation, two of the most desirable features businesses owners are trying to achieve.
But although the name does put a business in good stead, with good reputation comes expectation. Many people fear companies will just take the monthly fees and leave them abandoned to find a way of living up to what’s expected.
This is not the case. As well as providing a proven business strategy, franchisors offer a lot of ongoing support.
In any business venture, there are always going to be some bumps in the road. When entrepreneurs start up independently, they must go it alone and may not know who to turn to for help when the inevitable happens, whereas franchisees are often given extensive support and training to enable them to deal with issues.
Franchisors only make money if you do and it’s their reputation on the line, so it’s in their best interest to assist where possible.
Entrepreneurs may have years of business experience under their belt, but their companies still fail and quite often the reason is lack of passion.
The key to success is having a passion for what you do, enhancing your drive and dedication. Franchising is a great opportunity for those who want to turn a passion into a profit without a need for lots of experience; the business basics are already set out.
The Travel Franchise is passionate about helping individuals not just start their dream career, but enjoy success and runs regular retreats to help franchisees realise their full potential on both a personal and professional level.
We are proud to help people learn not only how to build an amazing travel business, which is a tangible asset, but also how to continue to grow it without limits.
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