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Wednesday, January 31, 2007

Are You Looking At A Franchise?

The franchise world is extremely interesting. I can guarantee there are several types of people who always make money at it.


  1. The franchise consultants
  2. The original franchisor
  3. Lawyers

You're probably wondering about the franchisee. Remember it's their blood sweat and tears that pay for the lifestyle the franchisor wants to become accustomed to.

Franchising Gives You Boatloads Of Cash!

Don't franchisers make boatloads of cash too?

Obviously if they're in McDonalds, or another hit like it they're going to make cash.

Ultimately though the question to ask is...

Is it your business?

And the answer to that is no.

No because the franchisor calls the shots, you use their procedures manual, their marketing, their products and every month you pay them a fee.

The Challenge of Franchising

If they want they can decide to close the business down, or sell it off. Then where are you?

A good example is where Chemex was bought by a different team who want to move from a simple "one man and a van" type operation to a multiple van operation. To my mind this is good news. But if you chose the franchise because you wanted to potter around in your van and you had no aspiration to manage others it's a problem.

The new team will want everyone to move to running multiple vans. After all if one van is profitable 5 are 5 times more profitable!

You can understand why franchising is so alluring. It's because it's perceived as less risky than starting a business with your own idea.

But really there are loads of people who've failed at franchising. And for any number of reasons:

  • The franchisor's promises of leads didn't materialise in the way expected
  • The franchisor oversold and overpriced the whole operation
  • The franchisee doesn't expect to work hard at their operation
  • The product or service isn't as in the demand as the franchisor expected.

There are plenty more where they came from.

That's not to say don't go down the franchising route just realise that you're still not your own boss.

By the way I don't sniff at learning the ways franchises are operating. That's because they may discover better ways of doing things which I can modify for my own clients.

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