Most jobs, tax revenue, and wealth come from high-growth companies that start with a great idea and scale it. And when it comes to scaling up, franchising is an increasingly popular option. The International Franchise Association revealed that U.S. franchises sold more than $825 billion in goods and services in 2022. This number is expected to continue to increase.
Editor's note: This article was originally published. entrepreneur magazine.
We both have decades of experience working with consumer and franchise brands, teaching at the Tariq Farid Franchise Institute at Babson College, and are co-hosts of the recently launched podcast Stars of Franchising I also serve as We have seen first-hand how franchising provides an excellent model for companies looking to expand and scale, as well as individuals seeking entrepreneurial opportunities to create economic and social value.
But among students, experienced business owners, and everyone in between, there is a wide range of opinions, ranging from the perception that franchising is arbitrary to the view that franchising leaves no room for creativity and innovation. , we often come across myths about franchising. Here are his three common misconceptions we come across and his advice on why franchising is right for you.
Myth 1: Franchising can be successful on autopilot
A successful franchise requires many partners. A franchisor who launches a brand. A franchisee store working to expand its brand. Bankers and investors who arrange loans.
Franchising can pave the way for growth through an established brand and operating model. Opening a new store will be easier if you can learn from successful companies' strategies. But that doesn't mean that sitting around and doing nothing will solve everything. Creating a fitness plan that gets you results isn't the same as actually working out.
Franchisees opening new stores must navigate everything from real estate site selection to launch planning to post-launch leadership, workforce, and supply chain management.
Almost every franchisee and franchisor we spoke to said success required grit, resilience, and an entrepreneurial spirit.
“We're excited to be able to help our clients grow their lives,” said Susie Lazenby, who owns and operates four StretchLab franchises in the Tampa Bay metropolitan area. There is no such thing as a semi-absentee owner. '' Similarly, Neil Faulkner, who went from his single Dunkin Donuts location 23 years ago to multiple locations and 500 employees today, says, “Franchisors work in the business and are responsible for all operations.'' “You have to be ready to do it.”
Franchising is a great opportunity, but only if you are willing to put in the work.
Myth #2: Franchising is not entrepreneurial.
Entrepreneurship is generally thought of as starting from nothing and turning an idea into a reality. But extending what already exists requires just as much creativity.
Neal, a Dunkin Donuts franchisee, grew up on a farm in Kansas, which he describes as a highly entrepreneurial environment. Franchises similarly require you to be responsible for a wide range of tasks and to execute them creatively. Opening a new Dunkin Donuts store was like starting a business from scratch. Neil had to come up with construction, negotiate with banks, manage employees, and much more.
The perception that franchising is not entrepreneurial relies in part on the image of franchising as a top-down model. However, many franchises are laboratories for experiments that can then spill over into other parts of the brand. McDonald's Egg McMuffins, Dunkin Donuts Munchkins, and Planet Fitness Black Card are all products that started at the individual franchisee level.
Franchising offers the best of both worlds: the chance to be entrepreneurial yourself and benefit from the entrepreneurship of others. Stephen Spinelli, president of Babson College and co-founder of Jiffy Lube International, said that when one Jiffy Lube franchisee discovers a creative innovation, it helps others within 48 hours. He taught me how he was able to distribute the products to all of his stores.
Franchise marketing expert Amanda Bialek sums it up best. “Franchising offers an opportunity to leverage entrepreneurship guided by good strategy.”
Myth #3: Franchises are not local and not targeted at specific people or specific types of businesses.
Some people think of franchising as an extension of a large corporation. But franchise brands are often run by communities and neighbors looking for a path into ownership and entrepreneurship. These locally owned and operated franchisees create jobs and social impact, generating benefits for local communities.
Similarly, there is a perception that franchising is suitable for people who have accumulated large amounts of capital and are looking for stable business opportunities. However, today's wave of franchisees is younger and has fresh ideas to stay on top of new trends.
At Edible Arrangements, we're seeing a trend of younger franchise owners using internet-driven tools to connect with customers. Franchisors launching new brands may be young. Cousins Jim Tzelikis and Sabin Romac founded Cousins Maine Lobster together in their late 20s and early 30s, securing a 15% equity investment from Barbara Corcoran. shark tank.
Just as young people shouldn't overlook franchising, neither should anyone interested in businesses outside of the typical restaurant brands that are often thought of as franchising, such as Panera or McDonald's. Franchising is a great model for the food industry, but many other businesses have found success with the franchise model, from gyms to urgent care centers to car dealerships.
The big message: Franchising is much more local and far-reaching than you might expect in terms of who the entrepreneurs are and the types of businesses they run.
Franchising may be right for you
Franchising provides an opportunity to leverage proven brands and services to achieve results. It offers a chance to become an entrepreneur. This has room for growth, and multi-unit franchisees currently account for most franchise units in the United States. And regardless of perception, franchising can be embraced by many different types of people and types of businesses.
Whether franchising is right for you depends on your goals and objectives and the quality of your franchisor. No matter what, succeeding in franchising requires guts, leadership, and entrepreneurial spirit. If you take advantage of these, franchising can provide a resilient path to financial success.
Ab Igram MBA'96 teaches entrepreneurship and is executive director of the Tariq Farid Franchise Institute at Babson College. Vincent Onyemah is a professor and director of the marketing department at Babson College. Together they co-host the podcast Stars of Franchising: Stories of Inspiration & Entrepreneurial Grit.
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