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Most jobs, tax revenues and wealth to come from fast-growing firms that start with a great idea and then scale it. And when it comes to scaling, franchising is an increasingly popular option. International Franchise Association found that U.S. franchises sold over $825 billion in goods and services in 2022, and that number is only set to grow.
Together, we have a long time of experience working with and teaching consumer and franchise brands Tariq Farid Franchise Institute at Babson Collegeincluding as co-hosts of the recently launched Franchise Star Podcast. We have seen firsthand that franchising provides an excellent model for firms looking to grow and scale, in addition to for individuals in search of entrepreneurial opportunities to create economic and social value.
However, among students, experienced managers and everyone else, we regularly encounter myths about franchising – from the idea that franchises run on their very own to the idea that they provide no room for creativity and innovation. Here are three common myths we encounter and our advice on why franchising may be right for you.
Myth #1: Franchises can succeed on autopilot
A successful franchise requires many different partners. Franchisors who create the brand. Franchisees who work to develop this brand. Bankers and investors organizing financing.
Franchising can pave the way for growth with an established brand and operating model. Opening a latest store is easier when you can learn from the company’s manual on how to achieve success. But that doesn’t suggest you can sit back and every part will probably be sorted out. Having a fitness plan that will get results is not the same as actually exercising.
A franchisee opening a latest store must go through all stages, from choosing a location and planning its launch, to leadership, labor and supply chain management once the store is up and running.
Almost every franchisee and franchisor we talk to says it takes fortitude, resilience and an entrepreneurial mindset to achieve success.
Soozie Lazenby, owner and operator of 4 StretchLab franchises in the Tampa Bay metro area, tell us that “a franchise doesn’t run itself. There is no such thing as a semi-absentee owner.” Similarly, Neal Faulkner, who moved from one Dunkin’ Donuts store to multiple locations 23 years ago and now employs 500 people, insists that “the franchisee must be in the business and be ready to handle any task!”
Franchising is a great opportunity – but only if you’re willing to do the work.
Myth #2: Franchising is not entrepreneurial
People often imagine entrepreneurship as starting from scratch and bringing an idea to life. But scaling something that already exists requires just as much creativity.
Neal, a Dunkin’ Donuts franchisee, grew up on the farm he owns in Kansas describes as a highly entrepreneurial environment. Franchising offered a similar demand for taking responsibility for a wide selection of tasks and being creative in their implementation. Opening a latest Dunkin’ Donuts location was like starting a business from scratch: Neal had to come up with a structure, handle banking negotiations, manage his employees, and more.
The view that franchising is not entrepreneurial is partly based on the image of franchising as a top-down model. However, many franchises are experimental laboratories that can then spread to the remainder of the brand. McDonald’s Egg McMuffin, Dunkin Donuts’ Munchkin and Planet Fitness Black Card are products that began at the level of the individual franchisee.
Franchising can offer the better of each worlds: the probability to be entrepreneurial and profit from the entrepreneurial spirit of others. President of Babson College and co-founder of Jiffy Lube International, Stephen Spinelli Jr. common with us, when one Jiffy Lube franchisee discovered a creative innovation, it could possibly be distributed to all other stores inside 48 hours.
Amanda Białek, franchise marketing expert, summarized it best: “Franchising gives you the opportunity to tap into your entrepreneurial spirit with the guidance of a great textbook.”
Myth #3: Franchises are not local and are not intended for specific people or sorts of businesses
Some people view franchising as an extension of a large corporation. However, in most cases, franchise brands are run by people in the community, your neighbors, who are looking for a path to ownership and entrepreneurship. These local franchisee owners and operators then create jobs and social impact, generating social advantages.
Similarly, there is a belief that franchising is suitable for individuals who have accrued a significant amount of capital and are looking for stable business opportunities. However, today’s wave of franchisees is younger and has fresh ideas for staying in touch with latest trends.
Edible Arrangements is seeing a trend among young franchise owners who use Internet tools enabling contact with customers. Franchisors launching a latest brand can also be younger. Cousins Jim Tselikis and Sabin Lomac have joined forces found Cousins Maine Lobster w their late Twenties and early Thirties – and secured a 15% equity investment from Barbara Corcoran Shark Tank.
Just like young people shouldn’t overlook franchising, neither should those interested in a business apart from the typical restaurant brands like Panera or McDonald’s that people often think of as franchises. While franchising is a great model for the food industry, many other businesses, from gyms to medical practices and automotive dealerships, have found success with the franchise model.
The bottom line: Franchising is much more local and expansive – in terms of who the entrepreneurs are and the sorts of businesses they run – than you might expect.
Franchising could also be the solution for you
Franchising provides the opportunity to leverage a proven brand or service to achieve results. It provides an opportunity for entrepreneurship. Offers Room for Growth – Multi-unit franchisees now make up the majority of franchise locations in the United States. And contrary to popular belief, many people and sorts of businesses can start a franchise.
Whether franchising is right for you depends on your goals and objectives and the quality of the franchisor. No matter what, success in franchising requires decisiveness, leadership and an entrepreneurial mindset. With these in hand, franchising can provide a sustainable path to economic success.