Why Owning a Franchise isn't the same as being an Entrepreneur

Written by Ashwin Satyanarayana for Gaebler Ventures

Do you think being a Franchise is the best route to take to become an entrepreneur? Is this a wise decision to make? Here are some reasons why it is not so.

If you are an entrepreneur or if you are aspiring to be one, what do these numbers mean to you?

According to Franchise Consultants, Inc., the franchise market is worth at least $2 trillion. This is almost equal to 4th largest GNP in the world. In another perspective, all this money stacked up could go at least half the way to the moon - approximately about 137,000 miles high. Almost 50% of all retail sales in the United States are accounted for by franchise sales. Against all these statistics, do you think being a franchisee is the best route to take to become an entrepreneur? Here are reasons why it is not so.

Franchise is someone else's business, not yours

Think about it: when you consider taking up a franchise, you are really asking a business owner to lend his idea and the accompanying business systems to you. You now being asked to run a business, just the like the franchisor designed it and floated it. You don't change a thing about the franchisor business systems, brand image, ways to market, operations and processes. Nothing ever changes. Haven't you got yourself a fancy job that you had to pay thousands of dollars to get?

You can't innovate; that's like taking the oxygen mask of an enterprising entrepreneur

An entrepreneur is a person who "creates" and "enterprises." If you look closely enough, being an entrepreneur is all about being creative, starting something new, and devising new ways to deliver old services or to figure out unique ways to do things. When you take a "business-in-a-box" franchise, isn't that old charm of floating your own creating lost? Aren't you skipping the whole entrepreneurial process?

It's expensive and inflexible

A franchise is a huge contract you are going to be bound by. It is going to be an expensive business to start and it will have additional overheads that you will have to bear apart from the normal business costs. One major cost element that stands out is the "royalty" that you will have to pay the franchisor annually. If you had your own business, you could have the luxury of bootstrapping and starting off on a small note. You could start out inexpensively and grow at your own pace, in your own way.

It is not to say that franchises are bad and that you shouldn't even consider. It's just that taking up a franchise isn't for everyone and you must do some thinking before you get into it. After you consider all the pros and cons, you will be able to decide if franchising is for you or not. However, one thing stands out clearly: the true entrepreneurs are the "franchisors" and it is not the "franchisees."

Ash has an undergraduate degree in engineering and an MBA from Ohio University. Today he is a corporate trainer, business coach and a freelance writer.

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