The Franchise Business Model: Is Franchising Right for You?

Although Success Magazine is one of my favorite publications, a recent article "Business to Consider: Franchise Opportunities" by Brenna Fisher discusses the benefits of purchasing a franchise.  While I think Mrs. Fisher is providing some good information I am concerned that the article does not present the complete picture.  In particular Mrs. Fisher states "Owning a franchise significantly reduces your risk..." plus "franchisors profit when their new ventures do well, so it's in their interest to provide the tools and assistance you need".

Addressing these particular statements, prospective franchisees - individuals considering the purchase of a franchise - need to understand that franchise opportunities and franchisors are not all created equal. So even if a static somehow demonstrates that franchisees achieve a greater level of success than independent business owners (a statistic that I do not believe exists) if you select the wrong franchise agreement and do not adequately negotiate and evaluate your franchise agreement your potential for "franchise success" may be greatly reduced.  Also keep in mind that not every franchisors typically receive royalties based on "gross sales" and not based on your profitability.  While the truly successful franchisors understand the significance of enabling and acting to support franchisee "profitability" some franchisors just focus on expansion and royalties.

Although I am an advocate of the franchise business model (for both franchisors and franchisees) I nevertheless must caution that, the franchise business model is not right for everyone.  When purchasing a franchise do not assume all franchisors are the same - they are not.  Conduct the necessary due diligence and speak to a qualified business lawyer about your legal rights and obligations.