Why It Makes No Sense to Buy a Franchise

Many people think that buying a franchise is a great and potentially a very profitable business option. However, it's not so simple.

In fact, a franchise is a turnkey business. You give your money, acting as another investor in someone else's business and you are provided with products for sale. Who are you in this system? You are a sponsor of someone else's business, you just races build someone's idea for your money. All rights to this product do not belong to you. Any changes in the goods must be agreed with the manufacturer.

However, not all franchises are equal, some cost fair enough, but some are overhyped. Therefore, the price distribution of different franchising opportunities seem a bit unbalanced in certain situations.

In the beginning of my business path I bought a “renting apartments on daily basis” franchise. At that time, I was tired of constant attempts to build something profitable and decided to simply buy someone else's experience. But everything was not so simple.

Firstly, the franchise owners receive income from the sale of the franchise mainly, and to a less degree from the further successful management of their businesses by you. Therefore, the help that was promised before the purchase, all those big words often do not lead to real action from the franchise sellers. I can not speak about every franchise proposal, but in 90 percent of cases that I knew it's all happening that way.

Think about it – why it is needed to sell a working business model that already brings money, give all the potential profit if it is possible to take a loan from a bank or any other loan on the basis of these successful indicators or wait a couple of months and earn them and start a business in another city without another person help? At least here it can be said that a businessman does not fully believe in his idea and is ready to test it with the help of other people's money and time, and also to earn money in any case by selling the franchise. Therefore, even for getting experience, this option is not always appropriate.

Secondly, you must initially understand that your maximum income in this case is strictly limited. Even if everything went well and the business started to grow, sooner or later you would want more – to go outside your city and expand, at least. But you will be obliged not to start a similar business and you will not be able to redeem your branch, as it is very often prescribed in the contract.

Every ambitious person always wants more. Think about that – what forces billionaires to go every day to the office and make new deals, why not just rest and sunbathe on the beach for the rest of their life? The ambitions. The desire to constantly go forward. The fact that they now have more money than, for example, you do, does not make them less interested in achieving their next goals. The same applies to this situation – even if your experience with a franchise would be successful, you would want more for sure. And even if now you think that as soon as you earn a certain amount of money, you will calm down, I am sure you are wrong. You are reading this business article on a business website. And it means that you have the same characteristics as the richest people on the planet. They always want more. You will feel the same. Even a successful franchise will always limit your plans, and it's a high possibility that you will have to start all over again and open a new business. Your own business.”

This guest post is courtesy of Roman Jhur. He is the founder and CEO of outstaffing/outsourcing company HuntSmart Inc. They operate worldwide.


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