Should you become a franchisee?

Posted by Joe Klein on January 2, 2014

We only have one advice to would be franchisees: Don't do it!...No ifs, no buts, no exceptions! If you examine the structure of franchises, it becomes immediately obvious that they are geared towards benefiting the franchisor and limiting the freedom and earning potential of the franchisee. Not only is there a hefty up-front franchise fee, but the franchisor is forever in your pocket: There are advertising fees, restrictions on where you can buy stock (often from the franchisor only), limits on the geographical boundaries you can service, strict lease conditions, the list goes on and on. The franchisor's leverage over the franchisee is near enough to absolute. The contracts are usually drafted in such a way that the smallest transgression can result in the franchisee being booted out of their "business" and losing everything.

You might have heard of happy stories about franchisees getting rich, but they are the exceptions to the rule or possibly just tall-tales. We certainly haven't come across any happy endings - in fact most of the time things end in tears.

It's one of those arrangements that bring the worst of all worlds together - You get none of the benefits of self employment nor the relative security that comes with a full time job.

Just in case you are still in doubt about our opinion regarding buying into a franchise, here it is again: Don't do it, in fact don't even think about it...