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Are Franchises Really Worth The Investment?

are franchises worth the investment?

I get asked that question (in some form or another) all the time.

The thing is, my answer-the answer actually, is a matter of opinion.

(This post may contain affiliate links. Please read my disclosure policy).

Unless you look at what you get when you buy a franchise.


The Deck Is Stacked In Your Favor

You get so much when you buy a franchise.

So many tools. And a system. A serious, and proven, bad _ss business system.

And let’s not forget the franchisor’s experience.

From an article I wrote for American Express Open Forum:

They have experienced the trials and tribulations of a pure start-up business, in most cases. Let’s use a pizza franchise for an example, since it’s an easy one to visualize. Joey and Sal have been in the pizza business for years. (Before they decided to franchise their business) The early years consisted of things like getting their sauce just right, choosing locations for their pizza places, experimenting with different menu add-ons, figuring out how to hire the right people, keeping the books together, and making sure that the expenses stayed in line. It wasn’t easy. They made a lot of mistakes that you won’t have to.”

You can read the rest of the article here.


So, Are Franchises Really Worth The Investment?

I guess I didn’t answer that question yet. Sorry. I will. Here goes.

Franchises are definitely worth the investment. In general. Especially if you’re one of these.

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I wrote “in general” because for franchising to work, both parties need to do their part.

Franchisors have to:

  • Offer great products/services
  • Create tight business systems
  • Use the latest technology
  • Invent new offerings
  • Provide field support
  • Offer powerful marketing/advertising templates
  • Focus on franchisee profitability

Tip: Make sure your franchise research reveals that the franchisor does, in fact, offer and do all of those things for their franchisees.

Good News! All of my products show you exactly how to do flat-out amazing franchise research. Please take a look at my proven franchise ownership products.


What You Have To Do

The first thing you have to do is get the following term out of your head.

A Business in A Box.”

Be Gone!

To put it bluntly, there’s no such things as a “business in a box.” And to this day, a few franchisors continue to use that term when describing their franchise opportunity.

You can read what I wrote about this franchise falsehood on my friend, Carol Roth’s website. Then pop back here, so I can show you what your role is in your potential franchise investment.


For Franchisees

In order for a franchisee make her investment in a franchise worth it, there are several things franchisees need to do. They include:

  • Having enough working capital to make it through the early days/months
  • Attending training at franchise headquarters
  • Participating in new product/service training
  • Using the franchisor’s business systems to maximum advantage
  • Spending enough money on marketing/advertising
  • Communicating with other franchisees
  • Getting involved in the local community
  • Adding additional space or units when able
  • Attending annual franchise conferences

And, much, much more.


franchising is a two-way street

Franchising Is A Two-Way Street

As you’ve seen, franchising is really a two-way street.

For your investment to be worth it, both parties need to be in it to win.

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The franchisor needs to focus on keeping the organization running smoothly. Investing in the right technology is one way to keep things humming along nicely.

In addition, the franchisor needs to always be looking ahead. New products/services must be offered. The latest marketing techniques need to be leveraged. Franchisee profitability must remain top of mind day-in and day-out.

Franchisees (you?) need to have enough startup money and enough working capital.

Franchisees need to attend new training when needed; for example, when a new product or service is introduced.

In addition, informal relationships with other like-minded franchisees need to be cultivated. Several heads are always better then one-especially if everyone is experiencing the same issues.

(Franchising is not perfect. Stuff occasionally goes wrong.)

And growth.

Franchisees need to be on the lookout for growth opportunities that can help them reach their dreams and goals.


Worth The Investment?

In the final analysis, if you choose a good franchise opportunity that’s run by a quality franchisor, and your skills are a good match for the business, a franchise business opportunity is usually worth the investment. But you have to have enough money to do it.

What do you think?

If both parties do what they need to do, do you feel franchises are worth the investment?

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I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes. For over 20 years, I’ve been helping people make smart, informed decisions on franchises to buy, and I can help you, too! #thefranchiseking
The fantastic thing about Joel is his neutrality. Because he is not getting an incentive fee, he will always give you the advice that you need (even if not what you necessarily want) and that's pretty unique these days. Thank you Joel!"
- Nic Church, France
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