by Patricia Schaefer

What have you personally found has been the best thing about being a franchise owner? What have you personally found has been the worst thing about being a franchise owner? Was there anything that surprised you about being a franchise owner?

These are the survey questions Franchise Trade asked franchisees across the U.S. Franchisees are from franchise systems large and small, in a variety of industries, and located in all regions of the nation. All responses were anonymous so franchisees would feel free to "tell it like it is." Accordingly, the names of franchisees and their franchise systems are not given in order to protect franchisees' identities.

What these franchisees had to say is a fascinating snapshot of a frank "unhyped" reality of what it's like to be a franchisee today.
What have you personally found has been the best thing about being a franchise owner?

The price of advertising is cheaper than if I had a business of my own.

The best thing has been the product itself: The brand sells itself, and the product sells itself.

The franchise support system is great. Whenever I have a question, I can just pick up the phone and Support staff are available with the answers.

The whole system of the franchise has been great. Everything is ready to use from beginning to end. No headaches.

The best thing about being a franchisee is working for myself.

The research the franchisor has already done and the fact that it's a proven method is great.

The support from Corporate is the best.

There are several great things about owning my franchise:

* I get to dance for a living.
* I can do all the preparation at home -- working around my family obligations.
* I love the community of women that I've met professionally. I love the clients and my fellow instructors.
* The company encourages and provides opportunities for extensive networking.

There is no best thing. Franchising for me has been a bad thing.

Every six months in my previous job, I was worried about being downsized by the large corporation I worked for. The best thing about being a franchise owner is being able to rely on myself, and not having to rely on a large corporation for my job security.

I love the flexibility my franchise allows and being my own boss.

The best thing about being a franchise owner has been the national recognition though collective advertising, and the support system (i.e., if I have a question, can always get assistance).

Having had no prior experience as a business owner, the best thing has been everything that comes with buying into a franchise system -- it really helps.
What have you personally found has been the worst thing about being a franchise owner?

I'm required to buy the product line that I sell to my customers from my franchise company. I feel the costs are unfairly high for the products, so my revenues are lower than I would have liked or expected.

The worst thing is my territory -- I don't have enough. If I had more territory, I could be earning more.

Just because you buy a "franchise" doesn't mean that their product is well-known in your particular area. Although you're buying into a brand, it can be somewhat like starting from scratch in your own business. It's been tough for me to brand a product that virtually no one in my area knows about. There's a whole range of franchise brand awareness; from a brand like McDonalds to other lesser-name brands. I've needed to spend more dollars on marketing than I anticipated.

I don't really have a worst thing. The only negative I could say is that as a franchisee, you have one more check above you; you have to answer to someone else. The few times I have heard from Corporate about a customer complaint, it's been easily resolved, so I really haven't had a problem.

The start-up costs were higher than expected, and taxes on small business are very discouraging.

Revenues aren't as good as I expected. I took over a franchise from another franchisee, and in hindsight realize I didn't know all the questions to ask this franchisee in terms of specific details regarding incoming revenues. There's a fairly short period of time -- a window -- to perform research. I did have an accountant, but feel I still needed better guidelines when looking through records.

The limitation in local advertising has been the worst thing. Having a well-known brand, national awareness and word-of-mouth is great. Things though are different on the local level. If I advertise in my local newspaper, someone else in the franchise also has their territory in the paper's distribution area. My solution has been to advertise only within my territory; i.e., sending mailings only to particular zip codes.

The money is bad:

* We pay 20% off the top to the corporation.
* The rent for commercial space in my area is prohibitive.
* Clients pay a relatively small amount to take classes.

I feel I was misled by Corporate. This industry is very expensive. I didn't get the right information -- the costs, everything. I have to buy from a particular vendor and the costs are exorbitant.

In business for just over a year, I'm not making nearly as much as I expected. I do though anticipate revenues to get better within the next year or two.

The worst thing has been the employee turnover.

The royalty structure is pretty costly. I've been a franchisee for 13 years, and at first I felt like I was getting something for my money. After a few years, though, I didn't need anywhere near the same level of support and now I feel like I'm not getting my money's worth.

Following requirements, whether I like it or not, has been the worst thing; i.e., where the advertising fees I pay to Corporate are spent.
Was there anything that surprised you about being a franchise owner?

What surprised me was the degree of control the franchisor has over us (the franchisees). I find the degree of control excessive.

Temper your enthusiasm. I did my research: great idea, great product, and people I surveyed loved the idea. Additionally, my research showed that business was pouring in to the already established corporate stores. But there's a difference between people liking the idea and buying the product (which has a significant price tag). With my franchise being four hours away from Corporate stores, brand recognition is practically nil and revenues thus far have been less than I anticipated. A big surprise.

I was pleasantly surprised with the level of support that the franchisor provides. Everything is ready for the franchisee, with the franchisor as a helping and guiding force.

I was surprised by how much we have to pay in taxes as a small business.

No surprises. I did a lot of research. I like the structure and support of a franchise, and like working with a large corporation. The franchisor sends mentors out; I can call my sister stores -- it's like a family.

The franchisor was very clear about their policies, so nothing was a surprise.

I was surprised by the amount of work required to produce and keep producing classes.

There was nothing that surprised me about being a franchise owner.

I was surprised by how expensive everything is. I have to buy from Corporate -- everything is overpriced.

Prior to purchasing this franchise, I had only been an employee. I had no experience supervising other employees. I was very surprised to find how difficult it is to select, supervise and motivate employees so that they will perform necessary tasks to my satisfaction.

Nothing really surprised me. It's pretty much what I expected.

I was surprised to find that being a franchise owner in a good franchise system does not guarantee results. I have found that it is the franchisee's own skills, ambition and abilities that are the strongest factors in determining the success of a franchise.

Nothing comes to mind as far as surprises.
A few findings and conclusions

Most of the franchisees I was unable to reach were absentee owners, and there were many. Their managers were running the daily operations, and owners I was told came in to the store, for example, only "on Thursday mornings." Business experts often cite the risks of absentee ownership, but it appears that absentee owners comprise a significant portion of today's franchisees.

The individuals who cited franchise support as being "the best thing" were from both newly and long-established franchise systems. This is encouraging news for franchisees seeking to purchase a franchise that's a "new kid on the block."

Many of the "worst things" franchisees named were things that probably could have been found out had they done their homework a little better. In fact, many franchisees admitted that "in hindsight," they could have done a better job of getting all the needed facts about the franchise.

Based on our findings, it would serve prospective franchisees well to thoroughly research potential franchises, and then some -- preferably with the assistance of a qualified franchise attorney and a good accountant. Although no research is perfect, special attention to calculating realistic earnings, limits or restriction on product purchases, territory, advertising costs and assessing royalty fees may be a good place to start.

Copyright 2006, Attard Communications, Inc.

Labels: Franchise Opportunity