Is franchising really worth it ?

Time and time again, I hear about people going into franchising.  Time and time again people ask me to buy a franchise.  It’s true that in the past few years franchising has really taken off, business start up’s in general tend in increase in time’s of economic downturn as people who are laid off simply can’t get a job so go it alone.

Franchising ‘claims’ to offer that needed helping hand into the scary scary world of business, you buy into a brand, they help you set up, you pay them a fee and an ongoing % and we are all millionaires.  Easy right ?  No actually, 2 out of 3 new start ups go to the wall within the first 18 months and franchises are certainly not exempt from these statistics.

If you are thinking of buying a franchise, you need to ask yourself one simple (double barreled) question.

Is it worth it & could I do it cheaper and better myself ?

Jim’s mowing service is case and point of what I am talking about here.  For £15,000 and around 7 – 12% of your annual takings, Jim will essentially teach you how to cut grass.  Worth while I reckon if that includes the training, the van, the trailer, the mowers and the cutters…………. eh no.  For £15,000 Jim will teach you how to cut grass and build a business, you still have to buy the rest of the kit yourself.

Let me now save you £15,000, here is in 5 easy steps is how to set up a mowing business.

1.  Buy a ride on mower, push along and a petrol strimmer

2. Buy a trailer

3. Buy 10,000 leaftets with ‘yourname mowing service’ printed on it (and your phone number)

4. Go and knock some doors

5. Finally, if you are really brave, start applying for some big tenders to cut grass for shopping malls, government buildings and schools etc.

There you have it, I guarantee you will be cutting grass and making money in your first week (or your money back).  You don’t need to buy a franchise to do this, you just need to grow some balls.

There are hundreds of companies like this in franchise magazines and at business ‘expos’ and they really drive me nuts !

That said, some franchise’s are good !

Yes, here we go….. eating my words already.  Some franchises are good!

McDonalds have built a global brand through franchisees stores, it will cost you the guts of 1/2 a mil to open one but you can be sure you will be in profit with in 18 months, Coca-Cola is essentially a franchise, although not one you will be easily able to buy into given they already trade in pretty much every market in the world.  Retail franchises can help you get credit for fit outs and negotiate rent’s with landlords that the average person just can’t get.

It all really come’s back to the same simple question

Is it worth it & could I do it cheaper and better myself ?

Could you open a burger joint for less than 1/2 a mil?, of course…… would it bring you the success of a McDonalds?…… I doubt it.  Can you build a hotel brand from scratch?  Yup, will it give you bookings from day one and had you your suppliers begging to do business with you like a Holiday Inn will?, maybe……

Run the number’s, do the research, make a decision.  It really is that easy.


One Comment on “Is franchising really worth it ?”

  1. rob says:

    I’ve met a couple of McDonald’s franchisees – they work bloody hard, but judging by the cars they drive, they aren’t doing too badly!

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