Starting a Business vs. Buying a Franchise: 3 Franchise Myths

Category: Buying a Business

Starting a Business vs. Buying a Franchise: 3 Franchise Myths


Starting a business is a big undertaking with a lot of considerations. One of your first decisions: will you start a business completely from scratch, or franchise an existing one?

There are a lot of myths around franchising, but the truth is, it’s the most stable and least risky way to become your own boss.


Myth: Franchises Are All Quick Service Restaurants

True, the franchises you’re most likely to notice on your daily drive are quick service restaurants. But just because fast food restaurants are prominent doesn’t mean they’re the only franchises out there.

In fact, the majority of franchises in the United States are not quick service restaurants. As of 2017, more than 70 percent of franchises were businesses outside the realm of fast food. These businesses include beauty salons, gyms, automotive shops, and more.

There are franchises for nearly every type of industry imaginable. When considering starting a business from scratch versus investing in a franchise, don’t limit your considerations to just the businesses you associate with the franchise model. Instead, think about what kind of business you would like to own, and what you want your role in that business to be.


Myth: You Need Millions Of Dollars To Get Into A Franchise

A quick web search of how much it costs to buy a franchise will spit out a wide variety of results. Some websites say you need as little as $10,000, while others say you need a million dollars or more.

The cost of getting into a franchise varies across industries, but there is usually no need for potential operators to have a million dollars on hand. There are funding options to help potential franchisees cover up to 90 percent of the total required investment. Some service-based franchises can also be home-based, which drives down the initial investment cost considerably as there is no need for physical retail space.

We recommend investing no more than 50 percent of your total net worth in starting your business. That way you have a cushion to live on while the business ramps up to profitability. Skip the Google searches; your franchise consultant can tell you what franchises are in your price range.


Myth: Franchising Is More Expensive Than Starting A Business From Scratch

This myth is based on the fact that franchisees pay a one-time fee to the franchisor for the right to use their branding and proven business system. However, this isn’t just an added cost that produces no benefit for the franchisee.

This one-time investment gives you access to a proven and profitable business model, supply chain, logistics support, technology, training support, and marketing strategy. When starting a business from scratch, you have to figure out (and pay for) all of these systems on your own. Investing in a franchise allows you to skip over the figuring-out phase of starting a business and jump right into growth.

Starting a business from scratch does allow you to exert more control over your business. But at the same time, you must be responsible for the outcome of every decision made. Investing in a franchise takes some of the heavy lifting of running a business off your plate, leaving you to focus on what matters to you.

If you have the tenacity to be your own boss, the net worth to buy into a successful business model, and the willingness to follow a proven plan, you’re likely to find franchising the fastest, easiest path to successfully being your own boss.

Here’s one barometer of success: more than half the business owners we helped to buy their first franchise come back within two years ready to buy their second.


If you’re still on the fence, schedule a consultation with a franchise consultant to get the rest of your questions answered.

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