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3 Common Misconceptions About Buying a Franchise

Franchising myths and misconceptions can cause you to make a poor investment or run a perfectly good business opportunity straight into the ground.

Many former franchisees learn this lesson the hard way after buying into a franchise system with the wrong ideas, wrong expectations, wrong plans and wrong skillsets in mind.

That’s a lot of ‘wrongs,’ I know.

But there is a way to avoid them all.

Last week, we discussed the power of preparation when buying into a franchise – how something as simple as doing a little homework can give you a realistic idea of what you’re getting into and can make the difference between your success or failure as a franchisee. Part of that preparation involves recognizing – and accepting – the naked truth about franchising. That means understanding what it really takes, accepting how it really works and knowing what kind of profits you can actually expect out of your new endeavor.

Next week we’ll go over some ground rules when it comes to choosing the right franchise. For today, let’s focus on clearing up some of the most common myths and misconceptions about buying a franchise. This will help you to prepare by abolishing some of the false ideas or expectations you may have about the process of buying a franchise and franchise ownership itself.

Misconception #1 – Franchising is a ‘safe’ investment

One all-to-common misconception is that buying into a franchise system will somehow guarantee your success – or that it’s a ‘safe’ investment. When you invest in a franchise with this attitude, it’s likely that the opposite will come to pass. If you falsely believe that your franchise unit will run on its own and automatically make you a profit, you will fail to provide one of the most important ingredients in franchise success: leadership.

First, no investment is ‘safe.’ Not even a franchise. While the appeal of a franchise is in its repetitive and predictable systems, your overall success still depends in large part on you and your individual efforts. Your leadership and steadfast command will drive the level of security in your investment. The more effort you put into it, the safer and more lucrative the investment may be.

Second, not all systems are created equal. The idea of ‘buying a franchise’ is broad when you consider that there are literally hundreds of thousands of different franchise opportunities available on the market – each with their own products, services, systems, levels of success, support and more. So, buying a franchise system is not necessarily safe. However, buying into a franchise system that’s right for you is safER!

Finally, many franchisees falsely believe that investing in a franchise is ‘safe’ because it’s easy. Let’s clear this one up by saying that a franchise system does not make the business easy to operate. The systems of a franchise make it possible for you to produce consistent and quality products and services for a well-defined target market. In other words, the franchise system gives you a deliberate goal and a roadmap for how to get there. You still have to do the work yourself, and that’s by no means an ‘easy’ task. Don’t fool yourself into believing that a franchise system will do all the hard work for you, it won’t!

Misconception #2 – There’s no creativity in franchising

I’ve often been approached by what’s known as a ‘semi-absentee’ franchise owner who is interested in investing in a franchise model – or two – with the hopes that it will quietly and reliably produce a passive stream of income with very little effort on their part.

They’re looking for something that involves no creativity – no originality – no thought process at all. If that’s the case, what they’re really looking for is likely an MLM – a multi-level marketing company. They’re like chopped-down versions of franchises and they require far less actual business skills.

A franchise, on the other hand, requires a tremendous amount of business creativity and original thought. While the franchise system may provide the foundation for your business, it does not take care of the minute details for you. You have to build the right team, master the art of marketing to your target audience, in your territory, balance your budget, keep your customers happy and network with the right folks in your local business community.

So much for not needing creativity.

That said, semi-absentee franchise ownership is not without its’ benefits. For the right investor, semi-absentee ownership can help you strike the right balance between ‘business owner’ and ‘investor.’ Just know that even semi-absentee ownership is not without its creative marketing needs.

Misconception #3 – Franchising is too expensive

I won’t lie to you: franchise ownership is not the cheapest investment you can make.

However, it also doesn’t have to be as expensive as you might think.

First of all, most prospective franchisees automatically compare franchise ownership costs to buying into, say, a McDonalds or Comfort Inn hotel franchise, for example. These are some of the most expensive franchise investments on the market and should – by no means – be what you compare all franchise investments to!

Some franchise investments can cost as little as $15,000 to get started. In fact, online publications such as and have recently made news highlighting the growing trend in affordable franchise options. That said, be VERY careful before investing in these low cost options and be sure to do significant due diligence. (Helpful Tip: Check out AND for some more straightforward franchise advise).

Furthermore, many would-be entrepreneurs erroneously believe that franchise owners are constantly siphoning off their profits to the franchisor. This is only true if you don’t have the FDD reviewed carefully with your CPA and attorney. As with anything in life, not all franchises are created equal. Some have better track records than others when it comes to how well they take care of their franchisees and how much they suffocate them with fees. The best way to avoid this trap is to have the companies FDD reviewed carefully before you invest. A sound franchise investment may have a fair amount of fees up-front, but should be minimal once the unit is up and running.

So, what can you learn from all this?

Let’s recap:

1. Franchising is NOT easy. It can – however – be worth the effort, if done right.
2. Your franchise unit can NOT be run by zombies. It will require that you have a sharp business mind, provide tremendous focused effort, and a willingness to learn.
3. And last but not least – franchising has become more and more affordable but be sure to carefully review the franchise you’re investing in no matter what the upfront investment is.

Next week we’ll be covering ways to choose the right franchise investment for your skills, goals, background and education.

What are some myths that you have heard about franchising?