5 Myths About Owning a Franchise


“With a private medical practice, the patients come to you,” the 38-year-old says. “With a weight-loss clinic, we have to get our name out there and market the brand.”

To do so, Wallace and her staff used several strategies including community health fair appearances, cable television commercials, and “walking down the street with pamphlets” that explained how her weight-loss clinic differed from other such programs. Her hard work paid off. The Lehigh Acres, Florida, franchise has generated more than $1 million in revenues since its doors opened in September 2009. Through it all, Wallace has maintained her medical practice.

3. Franchises Are a Safe Investment

Many people believe that a franchise isn’t risky because you’re buying a proven brand and business model. But there’s risk involved with starting any business, says the AAFD’s Purvin. And when it comes to franchises, not all concepts are successful. You can increase your odds of picking a winner by looking at performance data, Purvin says. A franchise’s failure rate can also provide a clue. For example, statistics compiled by the National Association of Government Guaranteed Lenders show that the loan failure rate of Amazon Café was 52% between 2000 and 2008, while Dunkin Donuts’s was 5% during the same period. Other considerations include the length of time the franchisor has been in business and whether brand recognition will help to attract customers.

4. You Are the Boss

Franchise ownership doesn’t mean you call all the shots. As an entrepreneur you naturally have the desire to experiment or tinker with the brand. However, franchisors are adamant about conformity. You won’t see a McDonald’s selling sweet potato pie.

Susan P. Kezios, founder of the American Franchisee Association, says, “The reality is you’re operating a business according to somebody else’s standards and policies, and they may change from time to time at the discretion of the franchise corporation.”

(Continued on next page)


×