I Can’t Afford a Franchise!
The costs of becoming a franchisee can largely vary depending on a number of factors. Of course, franchises with hugely recognizable companies like McDonald’s, Burger King, and Pizza Hut can come with some pretty steep price tags. But even with a huge company like McDonald’s, a big factor in cost is whether you want to purchase an already existing restaurant or build a completely new one. To purchase an already existing McDonald’s restaurant, you need to make a 25% down payment and pay off the remaining balance in no more than seven years. Building a new McDonald’s restaurant requires a $45,000 initial fee and equipment and other pre-opening costs that typically range from $955,708 to $2,209,146. Franchisees starting new restaurants also have to pay 40% of total costs with their own money and can only finance 60% of them.
If nationally or internationally known brands are out of your price range, smaller, regional chains may be a good option for you. For example, Cottage Inn, a pizza restaurant franchise popular in Michigan and Ohio, estimates the total costs of starting a Cottage Inn restaurant as a franchisee at between $99,000 and $160,000 (figures include all costs involved including initial fees, signage, equipment, training, rent, and supplies). There are also fewer restrictions on whether you use your own money or use financing.
I Won’t Be Able to Make My Own Decisions.
While you do have to follow the basic guidelines set forth by corporate, you have the freedom to make many decisions independently. Corporate has no say in who you do or don’t hire. Although some franchises offer assistance with marketing, in most cases, you’re able to make your own advertising choices. For example, you could set up a Facebook fan page just for your franchise’s location rather than having your customers “like” the main corporate Facebook page. Also, if you have a restaurant franchise, you can allow your kitchen staff to experiment with new ideas. You never know what might catch on. After all, McDonald’s Egg McMuffin was originally created by a franchisee, not at corporate headquarters.
I Don’t Know Anything About This Industry.
So maybe you’re interested in buying a franchise restaurant, but you don’t have any managerial experience and have never owned any kind of dining establishment before. Some companies may want inexperienced franchisees to find a partner who does have experience, but in many cases, lack of experience isn’t a deal breaker. You will be undergoing training that will teach you the valuable skills you need.
Franchises Are a Safe Investment/It’s Hard for Franchises to Fail.
While it’s true that franchises have an advantage in the sense that you’re working with an established brand that comes with a name many people will recognize, that doesn’t guarantee a franchisee’s success. Although franchisees can get guidance and training from corporate, there’s only so much corporate can do. You still need to invest a lot of time and effort into your franchise to make it a success. Corporate can’t help you if customers stay away because you make poor managerial decisions or hire a staff of people with poor customer service skills.