Should I Go For a Franchise?
Posted by abdul on 31 Jul 2009 at 1:43 pm | Tagged as: Entrepreneurship
Plenty of entrepreneurs think that buying a franchise is an amazing, quick and no-hassle way of getting into business for themselves and I detest that attitude. I have never been a believer in this business model nor will I ever be. I am not against the famous brands that allow you become a business owner by picking up a franchise; I am against the very idea of picking up a franchise in the first place from a true entrepreneur’s point of view. An entrepreneur has better things to invest in. Here’s why I think an entrepreneur should never go for a franchise:
- It is an expensive Business-in-a-box: Franchises are incredibly expensive. Most of the money goes to the franchisor and more than half of the investment you are making goes out towards the brand value and nothing tangible really. I would understand if you had to invest in 100 acres of land and setting up your steel plant; but I don’t know what to do when a McDonald demands a little less than that what it takes to set up a steel plant just for the name or brand. I am willing to bet that starting your own business would be much cheaper than this.
- It inhibits your creativity and takes half the fun out of running the business: When you take a franchise, you don’t have to think. Your work will be reduced to daily operations and this too will not have any input from you. Do you remember the importance of systems in business that I keep talking about? Now, the franchisor has taken the pains to develop those systems. You just have to hop in and push buttons. If you have to push buttons, why get into business? Either you start a business and become the franchisor or you get back to that job. Never become a franchisee; there is no fun in it.
- It rips your flexibility and freedom away: You can’t think of some new colors for the couch in the lobby; you can’t change the logo; you can’t do anything at all. You will have to do business within the confines of the franchisor’s corporate policies. Tell me, is this any different from that lousy corporate life? Why don’t you spare that high capital investment, feed it to a savings account and get a job instead? Same rules apply, but you will not lose your shirt.
I think franchises suck. The only entity that makes money in the process and grows is the franchisor. Everyone else loses shirt.
Build a business that can easily start a franchise model, if there was a need to, but not necessary — that means, that business has all systems sorted out. However, don’t go and pick up a franchise as a business that you need to run. What is your take on franchises? Do you agree or disagree? Do you know something I don’t?
