Why franchising is not the best move

[kurtyordy]

top-15-franchise-failures: Personal Finance News from Yahoo! Finance

 

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[NoMoneyDown]

Wow. One-third of those 15 were pizza franchises.

 

[randallg99]

conocophillips was a big surprise. upfront fees and costs for equipment for restaurants are incredibly expensive... even retrofitting costs for fire codes is unbelievable.

a friend just bought $200k worth of quizno's equipment for $2500 at a fed auction. definitely a sign of the times.

 

[MBinMT]

I see people in the early 2000's dreaming of working for themselves at a time when credit was super loose. Not a suprise that around 1/3 of these operations bit the SBA dust. I would have bet a C note that it would be even higher.

I am sure that it came as a shock to some franchisees that turn key operations still required the owner to show up. A good franchise will still lose a certain percentage of their new operational owners, a weak franchise is like a one way ticket to default.

 

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[biophase]

Just wondering if those numbers are in fact actually high. Some of those franchises had 25-35% failures which in the pizza or food world doesn't seem that bad to me. I guess I see it as a 65-75% success rate. Isn't the restaurant industry where 20% make it 5 years and 20% of them make it to 10 years?

 

[hatterasguy]

I'm not sold on the whole franchise idea, I don't like giving up control.

But I know someone inside a big franchise sandwich company, and he said you should see some of the numbers these guys are pulling in. One store located in a casino is pulling in $40k a week. But for every store making bank their are dozens just getting by or making ok money.

After talking with him I think if you can get a good brand into a good spot you can make a ton of money.


If you could stick say a Subway in a good sized colleges student center, you will make a ton of money. Easy, easy six figure take home per year. Problem is getting it in their is freaken hard.

 

[Kung Fu Steve]

Franchises suck

 

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[MBinMT]

Franchises suck

That may be the case for you, but in some cases it can be a great springboard onto the next level of true entrepreneurship. If you can use one as a learning resource (not unlike this forum), sometimes you just need a push to get going.

 

[Kung Fu Steve]

Yeah, I do agree with you. I have learned so much from owning a franchise. So I do give it credit for teaching me more. But frustrating none the less :smxB:

 

[MBinMT]

Absolutely, frustration is a common thing. :nonod:

So, let me ask you. If/when you move on and start your own brand spanking new organization and begin to build it, will you look at some of the frustrating things you have already dealt with and laugh? You will, because you will have already dealt with that problem or issue and it will be easy. It will take 2 seconds, and then you will have more time to deal with the next issue that comes along on the learning curve.

Books are OK, but learning by doing will always be the BEST way. I should know, 'cause I have made so many mistakes that I will now carry those lessons around forever. When I watch some of the old flipping house shows, its like a comedy show, you can see the disaster coming a mile away. Running a business is a lot like that too, I just don't have nearly as much "learning" in that area yet.

 

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[hatterasguy]

Franchises suck

Having a little business that makes $40k a week certianly wouldn't suck.

 

[randallg99]

does anyone know why conocophillips had a high rate of closure/failures?

 

[MJ DeMarco]

Another reason to avoid franchises ...

If you aren't in control over ALL your business decisions, you aren't in control.

Food fight: Burger King franchisees sue chain - Yahoo! Finance

 

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[Knightsman]

Interesting stuff. I always shyed (word?) away from Franchises, I looked into some, and to pay $100K just for the name, the you still have to buy the stuff seems like a bit much. My take, take the 100k and invest into your brand, your name, your product, your money!

But then again, im still new and learning!

 

[GeekEntrepreneu]

My wife and I have looked into possibly buying into a franchise (a restaurant franchise, actually) but have held off. There are a lot of pros with going with a franchise but also a lot of cons.

A friend of ours took over a weight loss franchise place not too long ago. So far, she's liking it but she complains about the lack of control she has, how she has to get every little thing approved by the head office, and how she practically has to do things "their" way.

I don't know if this is par for the course with all franchises but it's enough to make us think twice about going with a franchise.

Wesley Craig Green

 

[SaraK]

I'm sure that for all these franchises that are failing, there are a ton that are doing well, especially if they have low-priced products/services, and if they are located well and run well. I have noticed that business has picked up at the discount pizza chain by my house.

 

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[Runum]

From what I have seen, buying a franchise is no better than buying a job. We have siad here, many times, be the owner and sell your franchises but do not buy into a franchise. Be the driver not the passenger. Just ask KungFuSteve about his experience.:cheers:

 

[mainstreet]

I had a horrible experience with RadioShack. About the same as the Burger King fiasco without the class action. They set prices and set the prices they sold us to. On many big ticket items we could go to a corporate owned store and buy it with our employee discount card than what we could through the franchise are. I also started and ran a companys selling electronics, computers and more on my own. Let you guess which one made more money. That experience led me to create a new business to help others go into business without a franchisor check it out - Startup Help

 

[wildambitions]

So then, franchising could be a good move but buying a franchise is not wise.

I think MJ's and Runum comments are right on. As it has also been said regarding MLM. Don't join them, start them!

 

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