Buying a franchise and managing it until it grows and prospers is more than a job to those who choose to engage in this endeavor; it is a chance to put their entrepreneurial spirit to work, create job opportunities for others and provide a valuable service to the local community. It is also a chance to join hands with an already-proven business enterprise and do your part at building it bigger and better.
Furthermore, buying a franchise (as opposed to an “on-your-own” startup) offers numerous advantages, including instant name recognition, assistance with financing, training, managing and marketing, and an existing loyal customer base instead of having to create one from scratch.
However, it would be naive to think that running a franchise was free of all challenges and that everyone who starts a franchise will almost certainly do well. In reality, franchising is like any other business venture: full of great promise, but also riddled with significant challenges.
Here are six challenges everyone who commits to buying a franchise will almost certainly eventually face.
First, there are the startup costs, which are much lower than for non-franchise businesses, but still quite substantial. For example, to open a new Pretzelmaker location, you need to have a net worth of $250,000 and $100,000 in liquid assets. You also may need to invest anywhere from $210,000 to $335,000, the amount varying greatly by store size and location.
With each new franchise you start, the process gets more familiar, and thus easier, but each new location requires a good deal of paperwork. There is the application, the meetings with HQ and with current franchisees, the writing up of a detailed business plan and the review of the FDD (Franchise Disclosure Document). For Pretzelmaker, this process can take 30 to 90 days, and this is typical of most franchises.
It will take significant time and effort to research all relevant data concerning your new franchise, and it will take further learning commitments to adapt to the specific manner in which the franchise is to be run. With franchises, there is a preexisting system that must be followed, to one degree or another, as specified in the franchise contract you signed. However, all franchises provide help in getting you past this “learning curve.”
Even when you have chosen a time-tested brand, secured an excellent location, honed your managerial skills and surrounded yourself with an extraordinary crew, there will still be the inevitable ups and downs. At Pretzelmaker, for example, sales will boom on National Pretzel Day come April 26th, but however things may go on average, every day is not National Pretzel Day.
As a franchisee, you must learn to lean on both those below and above you. You cannot afford to “micro-manage” every tiny move of every employee, though you must ensure your franchise is running smoothly. On the other end, it would be a waste to not take advantage of the franchise support network, which can provide invaluable aid and timely advice throughout your franchising career.
More than half of all franchise locations (and three-quarters of food franchise locations) have multi-unit owners, and 3 to 5 units is a common number. Everyone has their limits and a desire to do “other things.” The key is to find a balance you are comfortable with long-term.