The simplest way to understand what a franchise is is to think of the most famous franchise in the world: McDonalds™. Many people from all across the world have dreams of owning and operating a famous franchise like McDonalds™. But is owning a franchise, or traditional store front business, really worth it? Would owning your own business really make you as happy as you think?
What's the deal with owning a store front business? Is it just hype or is it the true key to your financial happiness? Read on for the truth you must know about owning a franchise.
Your first problem is lack of money: Money will definitely be an issue: Did you know you need a minimum net worth of 1 million dollars just to be placed on a list to attend Hamburger University in Chicago, Illinois? One million dollars! This is the University every McDonalds™ business owner must attend to learn how to successfully manage their store. You'll do more research and find out you don't have the $250,000 you usually need to start a traditional business either. You can stop reading right now if you don't have this kind of cash on hand.
Another problem with owing a franchise is that it is actually very risky: Approximately 70 - 80% of traditional store front businesses fail within the first 2 – 5 years. And the percentages are getting worst as the economy suffers. Added to this, the average, “successful” business usually doesn't start consistently turning a profit in as long.
The third problem with owning a franchise or traditional store front business is the long, long, long, long hours you are required to work day in and day out: If you are planning on owning your own business, like a McDonald's™, I hope you are a hard worker: The average business owner works 15 – 18 hours a day managing their business. It's hard work day in and day out. It's too hard for too little gain. If you are going to work 15 – 18 hours a day running your own business, how is that much different than working in a factory everyday? After a few years of this, you'll quietly admit to yourself that you're in over your head, unless you just love to work hard all the time, day after day. Month after month, year after year...
The fourth problem is franchise fees: The franchise fees can be a real pain in the you know what. These fees can really affect your net earnings. When you consider you still have to pay for your regular business operation expenses, it's easy to see you are not making as much money as you originally believed you would.
Conclusion
If you think owning a traditional store front business or franchise is the answer to your financial problems, guess again. Use common sense and the guidelines above to avoid falling victim to the disadvantages of owning a franchise!
