Whoever said “a little knowledge is a dangerous thing” was right on the money

Luc Deslauriers - Franchise Specialist - Owner FranNet CT / RI - Franchise Consultant - Self Employment Expert - Career Transition Coach - Dynamic Public Speaker

When it comes to franchising, most people know very little and make wrong assumptions. Here are the six most common misconceptions.

Listen to Luc Deslauriers Franchise Misconceptions


Myth #1- Only fast or retail.

When I ask anyone to name 3 franchises off the top of their head, the usual answers are things like McDonalds, Dunkin Donuts and Subway. And why not? These companies spend millions of dollars a year to create that top of mind awareness. How many Subway commercials doe we see or hear in a day?

The truth of the matter is that there are over 3,100 franchised concepts out there. Some are food and some are retail, but there are also home based concepts, mobile concepts, business to business concepts. There truly is something for everyone in franchising.

Myth #2- Franchises succeed because of the quality of the product.

Can you make a hamburger? I know I can and I am also confident that my burgers taste better than a McDonalds, Wendy’s, Burger King, you name it. Since I’m not selling billions of them around the world, what makes those companies so successful? It’s achieving consistency, not only in the product but in all aspects of the business. It’s the systematic approach they use. Yes, a Big Mac should taste the same in any MacDonald’s restaurant. More importantly, you could take the manager of any location and put him or her anywhere else and they could operate it because all the operations are consistent. It’s all about the business system.

Myth #3- Successful franchises emerge from industries with no competition.

Wrong! Successful franchises come from well established industries by achieving consolidation. A prime example is the fast food industry. Franchising really started to take hold in the mid 50s. There was no such thing as the “fast food” industry. It was all independent burger joints, hot dog stands, clam shacks, you name it. By consolidating, companies like MacDonalds, KFC, Burger King were born. Today, the fast food industry is over 93% franchised.

Myth #4- Franchises are expensive.

Some are that’s true. Many food chains require million dollar investments. Fortunately, they only represent about 6% of the entire franchising pie. The biggest slice of that pie, 30%,are businesses that require under 100K investment.

Myth #5- High return requires high investment.

The fact is that it’s all about the net profit margin. Different industries have different cost of operations. A restaurant or retail store will require a large up-front investment to cover rent, staff, inventory, utilities, shrinkage and so on. Their profit margin is based on high volume sales. Service type businesses (home based or mobile) have higher margins due to their lower cost of operations.

Myth #6- Industry experience is required.

Nothing could be further from the truth. The franchisors job is to teach you the technical aspects of their business system. They are more interested in the skill set that you possess. Just because you worked it IT before does not mean you should purchase an IT franchise. Your skills are highly transferrable and could work in a number of other industries.