Too expensive, too regulated, too restrictive… Franchising has fallen victim to a number of preconceptions and clichés. And this applies to both franchisees and franchisors. A little clarification to set the record straight, and nothing but the record straight.
In franchising, certain prejudices die hard. Due to a lack of knowledge about the formula, some project owners are afraid to take the plunge, while others, on the contrary, imagine that they won’t have to do anything because the concept is turnkey. The same syndrome applies to franchisors: many believe that simply recruiting franchisees is enough to launch a network and become the “Paul” or “Midas” of tomorrow. Here are 10 of the most common misconceptions about franchising.
Franchisees
1/Franchising means success every time
False: The deductible is not an all-risk insurance policy. Of course, the chances of success are higher because you’re not starting from scratch: you’re benefiting from a tried and tested concept. But you’re also a business owner like any other: it’s up to you to run your business, hire staff, manage the administrative side and grow your company.
2/The process is endless
False: They are neither longer nor more tedious than when setting up a conventional business. It takes between 3 and 12 months to find the brand that’s right for you, meet the franchisors, do an immersion course, sign the contract, find the premises and financing, and finally open your outlet. You’ll even save time, because franchising means you’ll be up and running faster than setting up your own business. The only difference is that reading the DIP and the contract can be slightly time-consuming because of their complexity. The solution? Get help from a specialized lawyer.
3/Franchising is too expensive
True and false: This is the number one obstacle for project owners when asked about franchising*. It’s true that a franchise project can represent a greater investment than a traditional start-up. But that’s understandable. You have to pay for the know-how passed on by the retailer, the services provided (promotion, training, advertising, assistance), and sometimes for store fixtures and fittings, specific equipment and inventory. All these “little extras” had to be paid for. Initial investments range from €30,000 (brokerage, troubleshooting, IT assistance, etc.) to €200,000, and can exceed €500,000 in the restaurant and supermarket sectors. To finance such amounts, 80% of franchisees use bank credit.
4/I can say goodbye to my freedom of action
True: Although you’re an independent entrepreneur, you’ll have to abide by the network’s rules and processes. You’ll also be regularly visited by a sales representative, you’ll be subject to audits and hygiene controls, your results will be measured, and you’ll have to agree to invest – sometimes reluctantly – in changes to the layout of your outlets… In short, you won’t be able to do as you please, but don’t worry, you’ll also have some latitude. For example, you can forge local partnerships, organize tastings and events, and make your voice heard by taking part in thematic commissions….
5/It’s impossible to do business as a family
False: On the contrary, some networks love partnerships between spouses, especially in bakeries, flower shops and restaurants. Why? Couples often complement each other, making it easier to share roles. To be avoided, however, are activities that generate low margins (e.g. small service activities) and that don’t allow us to pay everyone.
6/ It’s hard to get your ideas across the network
False: most franchise networks offer franchisees the opportunity to take part in working groups or thematic committees (purchasing, marketing, advertising, etc.). These dialogue forums enable two-way communication between the network head and the field. Numerous initiatives are being taken by franchisees to improve their product offering, to meet new customer expectations… Cooperation and collective intelligence do exist for those who want to get involved.
On the franchisors’ side
7/ To launch a franchise, simply duplicate your model
False: You can’t turn your small flower store into Monceau Fleurs or your childcare startup into Babychou overnight. Franchising is a real business with its own codes, regulations and obligations: the concept must be attractive, profitable, based on know-how and, above all, duplicable. If not, there’s no need to go any further, because the very definition of the formula rests on these four pillars. The “franchising” process also involves a number of stages: setting up a pilot site, drafting a DIP and a contract, setting up a training program, recruiting the first franchisees… In short, it takes time (at least a year) and money to develop a network worthy of the name.
8/You can’t trust a franchisee with little or no experience
False: Franchising is the ideal way to retrain, and 76% of franchisees are former employees*. Thanks to initial training, franchisees, even those with no experience of the sector, can easily acquire the methods and technical skills they need. The most important thing to check when recruiting is the motivation of future candidates, their business acumen and their ability to adapt. These qualities will make all the difference.
9/ I have to look for premises instead of my franchisee
False and true: It’s not up to the franchisor to find the premises, but to the franchisee. However, given the scarcity of commercial premises, more and more franchisors are buying premises which they then offer to their franchise partners. In the end, it’s always the franchisor who validates the premises: he can refuse locations found by the franchisee, but he can never impose his own list of premises.
10/ A franchise concept must not evolve
False: Changing consumer habits, click & collect, digitalization… society moves fast, and retailers must constantly adapt to their market by innovating. This can involve store re-arrangements, new product positioning, personalized services, more attractive commercial offers… It’s by remaining competitive and continually innovating that franchisors are most successful and continue to be sustainable.
*15th and 18th Banque Populaire/FFF franchise survey
