It seems so easy, right? You invest some sum of money, depending on the size of the franchise, open up shop and the customers just start flowing in. If life were that easy everyone would do it, right? I think a franchise can be a decent opportunity for the right person, in the right situation. Franchises appear to offer a sense of stability and this can be reassuring, especially if you are considering leaving a comfy corporate job, but buyer beware!
Out of pure interest and curiosity, I called on a few franchises recently to get a feel for their requirements and what I could expect. I won't mention any names, other than that I called a sub shop and an ice cream shop. I know they are both in the food industry, but I was looking for start-ups that didn't require an exorbitant amount of start-up capital and were relatively new entrants to the market I stayed away from the popular names such as Dunkin Donuts, Tropical Smoothie, Einstein Bagels, etc... because they were quite expensive to get in to and didn't seem practical for the purposes of my query.
What I came to find out is that even the newest franchises require a lot of fees and money up front with not that great ROI. The sub shop I called on informed me that I was lucky because they had a corporate franchise for sale in my area. The shop had been open for a few years now and they would be able to send me a P&L statement through 2011 YE. The asking price was $175,000 and the EBITA was only $20,000. With limited growth potential, didn't seem like the best opportunity.
As entrepreneurs it is worth the risk and the time to create your own venture. If you are choosing to go out on your own then it is because you want to work for yourself. Embrace this and pursue your passion. Don't forget about the WHY!