FirstLight Franchise Blog

Five Myths About Franchising

Myth…so what is a myth anyhow?  Well, the definition according to is shown below.  But what about franchising myths?  Well, that isn’t quite so easy to define.  About a month ago however, I read a very informative article called “Exploding Five Myths About Franchising” on  John P. Hayes, Ph.D. is the author, and his focus in the article is about the myths of franchising.  I think that he sums up five of the main myths so succinctly that I would like to repost his article as is below.



1. A traditional or legendary story, usually concerning some being or hero or event, with or without a determinable basis of fact or a natural explanation, especially one that is concerned with deities or demigods and explains some practice, rite, or phenomenon of nature.

2. Stories or matter of this kind: realm of myth.

3. Any invented story, idea, or concept: His account of the event is pure myth.

4. An imaginary or fictitious thing or person.

5. An unproved or false collective belief that is used to justify a social institution.


Exploding Five Myths About Franchising

By John P. Hayes, Ph.D.

Myths About FranchisingMaybe you’ve thought about buying a franchise but you never seriously considered it because someone told you it’s too risky, it’s not a good idea, it’s for rich people, or it’s for people other than you.  Unfortunately, there’s a lot of information about franchising and much of it is wrong. Perhaps the information below will help you think differently about investing in your own franchise.

Franchise Myths

* The franchisor will make you do everything their way. They’ll take away all your freedom.

What does that mean, exactly? It would be interesting to call a prosperous franchisee and ask him or her, “Does your franchisor ever allow you to make a decision on your own?” If you think franchisors make all the decisions for franchisees then you will be surprised by their answer. Yes, the franchisor will force the franchisees to conform to standard operating procedures. The franchisor will control what you sell, what you say, what you wear, how, when and where you operate the business. It’s all part of branding, which is part of marketing, which is what makes money! But franchisors do not take away their franchisees’ rights to make all decisions. There are plenty of decisions every day to be made at the franchisee level. Just ask prosperous franchisees. Many wish there were fewer decisions to make!

* The franchisor charges huge fees so you’re just making them rich and not yourself.

Really? Are there no wealthy franchisees anywhere? Yes, every franchisor requires you to pay fees, including ongoing royalties. And if they’re not fair, why do people agree to pay them? Franchising is a business and a franchisor must make a profit. However, franchisors also need profitable franchisees. Otherwise, who’s going to pay those fees? Failing franchisees don’t last long. It’s just silly to say that the fees make the franchisor rich but not the franchisee. When it’s done right, franchising is potentially profitable for both the franchisor and the franchisees.

* You can’t sell a franchise. You don’t own it. Once you buy it, you’re stuck with it.

Who comes up with this nonsense? Of course you own it. You will sign a contract that gives you ownership to a license to operate a specific business. You will not own the trademark, the brand, the operating system, or anything else. Your license grants you the opportunity to build a prosperous business using the franchisor’s marks, training and support. And unless your franchise agreement says you can’t sell it, assign it, or transfer it, you certainly can. I’ve never seen a franchise agreement that prohibits the franchisee from selling, or what’s commonly called transferring the franchise. You can also make a profit when you sell– thousands of franchises have done so in the last 50 years!

* If you’re prosperous the franchisor will take the business away from you, or they will compete with you.

And franchisors will do that because . . . it makes sense for them to shoot themselves in the foot? Or they like to go to court and defend themselves against lawsuits? Franchisors and franchisees sign contracts that spell out their legal relationships. Sometimes the relationships are violated by both franchisor and franchisee. But people that consistently violate franchise contracts don’t remain in business very long. A franchisor lives and dies by its reputation. You can find out about scoundrels in advance of investing with them and avoid them!

* The franchisor will just take your money and run.

They won’t teach you anything or help you set up a prosperous business. Then why would you give them your money in the first place? There’s homework to be done before you invest in a franchise. Disclosure laws require franchisors to share information with you before you invest. If you do your homework you can find the right franchise opportunity.

Franchising is not perfect. It is not always prosperous. Some franchise companies fail. However, when a franchise goes bad, it’s usually the fault of the people involved and not the fault of the concept. Franchising works. It’s the safest way for people to start a business. It may not be right for you, but don’t be fooled by these myths.

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