If you were like me, thoughts of business ownership where like a dream – nice to think about on my way into work Monday morning, but impossible to do. After all, I didn’t think I had a skill set I could turn into a business, and I certainly didn’t have a ton of money to get started. I almost resigned myself to the rat race for the rest of my working days. Luckily, a friend introduced me to the idea of franchising, and the possibility of being my own boss suddenly wasn’t all that crazy.
I know, you just shuddered at the idea of owning a fast food restaurant. Don’t worry – we are going to explore the three most common myths of franchising, starting with that one.
This is the first and biggest myth when it comes to franchising. I thought it myself – sure I want to own a business, but I don’t want a restaurant. Too many long hours and deep fryer oil smells. Good news – there are so many more options! Thousands more.
By definition, a franchise is simply a license to use a trademark, products, and business system in exchange for an initial fee and ongoing royalties. It is not an actual product or service. Think of franchising as an industry in and of itself that crosses all business boundaries.
Examples of franchised industries include, but are not limited to: automotive, education, personal services, business coaching, light manufacturing, pest control, fitness, hair care, beauty, home services, business to business services and on and on and on.
The list is massive. Real estate, retail food, commercial cleaning, residential cleaning, pet grooming…. there’s a pretty big gamete of different types of businesses that franchising covers. Bottom line – It’s not just food. In fact, the majority of franchises are not related to food at all.
First, when we talk about how much franchises cost, we really need to think of it in terms of the total investment. Many people only think of the initial franchise fee, but it’s going to take a lot more than just the fee to get up and running.
When looking at the total investment for a franchised business, the price can range from $50,000 all the way up to a million dollars. However, the “sweet spot” is in that $100,000 to $250,000 range. That’s where you have the most choices. And like buying a house, given the right credit, a client can finance around 80% of the total investment price. There are many financing options out there most people never think about. (Did you know you can use your 401k to purchase a business with zero tax penalty? I didn’t either until I did it. You have options!)