As a Career Ownership Coach I help my clients find greater clarity in what they want for their career. There are many options beyond just getting another job for another boss to get another paycheck. Self-sufficiency is an attractive option for many who have burned out on the corporate treadmill.
One of the possibilities for self-sufficiency is investing in a franchise. Most people know about McDonald’s and Subway, etc. But of the more than 4,000 franchise brands in the US, less than 10 percent are restaurants, and only half of those are fast food.
So what are the other 3,500 brands about? You name it. Virtually every business and business model can be and has been franchised; many of them multiple times. Some of the names you may recognize, and others might be unknown to you.
One thing is certain: franchising works. It works for the franchisor, yes, but also for the franchisee. The success of thousands of franchisors is testimony to the possibilities it presents for self-sufficiency and freedom.
For many clients who consider franchises, they have questions about why they should go that route. That’s especially true for some of the lower-cost-of-entry options. “It’s a low barrier to entry and a simple business model,” they tell me. “Why do I need to pay the fees and royalties when I could just start that business on my own?”
Great question – let’s talk about it.
In addition to my work as a Career Ownership Coach, I am also a mentor with SCORE. For those unfamiliar, SCORE is an organization founded in 1964 with the sole intent of supporting small businesses and those who want to start a small business.
SCORE is funded by the Small Business Administration (SBA) and is staffed by volunteers who are willing to lend their time and expertise to help small businesses succeed. As a mentor, I work with three to four people each week, helping them develop business plans, rethink marketing strategies, and assisting them in solving the myriad other challenges that go with starting a small business from scratch.
Much of the work required to start and operate a “boot-strap” business – and it’s a lot of work – is already done by the franchise. Business plan? Done. Marketing plan and content creation? Done. Pro-forma P&L. Here you go. The list goes on.
In addition, as a SCORE mentor I never work with franchisors – they don’t need me. They already have a built-in knowledge base and support system as part of the deal. The franchisor is always there to lend assistance and direction as needed. Fellow owners are always willing to help out with advice and first-hand expertise.
SCORE is a great organization, but I can only do so much as a mentor. Every business challenge is different, and I can only rely on my individual experience to make suggestions. My experience may have little connection to the client’s business, but I do my best. Franchise business owners have specific and relevant expertise they are happy to share.
I once had a client planning to start a buffalo ranch. I know nothing about buffalo, and less about ranching. What I do think I know I’ve learned from movies. But I have a basic business skill-set and I tried to offer meaningful input to help him get started. I don’t know what to tell him to watch out for beyond taxes or making sure he has the right insurance coverage. He will have to learn the rest on his own.
Yes, the cost of franchising is higher, at least to start. But the long-term cost of learning every lesson the hard way is often much, much higher. It can take years to get your business operating profitably. Until then, you have to support yourself and the business, and you have no idea how long that might take.
Franchisees know up-front what the costs are, what the likely return is, and how long it will take to get there. If they aren’t hitting those milestones they have access to a wealth of subject matter experts who can and will help. The long-term prospects for a franchise are significantly greater than for boot-strap businesses.
Can you start a business instead of investing in a franchise? Sure. But with all the advantages that come with a franchise, why would you want to?