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Most jobs, tax revenue, and wealth come from high-growth companies that start with a great idea and then scale it. And when it comes to growth, franchising is an increasingly popular option. The International Franchise Association found that American franchises sold more than $825 billion in goods and services in 2022, a number that is only expected to grow.
Together, the two of us have decades of experience working with consumer and franchising brands and teaching at Babson College’s Tariq Farid Franchise Institute, including as co-hosts of the recently launched Stars of Franchising podcast. We’ve seen firsthand how franchising offers an excellent model for businesses looking to expand and scale, as well as individuals looking for entrepreneurial opportunities to create economic and social value.
Yet among students, experienced executives and everyone else, we often encounter myths about franchising: from the perception that franchises run themselves to the idea that they offer no room for creativity and innovation. Here are three common myths we come across, plus our advice on why franchising might be right for you.
Related: Debunking Franchising Myths and Choosing the Right Opportunity
Myth no. 1: Franchising can succeed on autopilot
A successful franchise requires many different partners. Franchisors building a brand. Affiliates working to expand that brand. Bankers and investors arranging financing.
Franchising can pave the way for growth through an established brand and operating model. Opening a new store is easier when you can learn from a company’s successful program. But that doesn’t mean you can sit back and everything will be taken care of. Having a fitness plan that gets results is not the same as exercising.
A franchisee opening a new store must address all aspects, from real estate site selection and launch planning to managing leadership, labor and supply chain once it is operational.
Virtually every franchisee and franchisor we speak to says they need grit, resilience and an entrepreneurial mindset to succeed.
Soozie Lazenby, who owns and operates four StretchLab franchises in the greater Tampa Bay area, told us that “Franchises don’t run themselves. There’s no such thing as a semi-absentee owner.” Likewise, Neal Faulkner, who grew from a single Dunkin’ Donuts store 23 years ago to multiple locations and 500 employees today, insists that “franchisees must work in the company and be ready to do every single task!”
Franchising is an excellent opportunity, but only if you’re willing to put in the work.
Myth no. 2: Franchising is not entrepreneurial
People typically imagine that entrepreneurship starts from nothing and brings an idea to life. But it takes just as much creativity to scale something that already exists.
Neal, the Dunkin’ Donuts franchisee, grew up on a farm in Kansas, which he describes as a highly entrepreneurial environment. Franchising offered a similar demand to take responsibility for a wide range of tasks and be creative in completing them. Opening a new Dunkin’ Donuts location felt like opening a business from scratch: Neal had to figure out construction, conduct banking negotiations, manage his employees and more.
The perception that franchising is not entrepreneurial is based in part on an image of franchising as a top-down model. However, many franchises are testing laboratories that can then extend to the rest of the brand. The McDonald’s Egg McMuffin, Dunkin Donuts’ Munchkin, and Planet Fitness Black Card were all products that started at the individual franchisee level.
Franchising can offer the best of both worlds: the chance to be entrepreneurial and benefit from the entrepreneurship of others. Babson College President and co-founder of Jiffy Lube International, Stephen Spinelli Jr., shared with us how when a Jiffy Lube franchisee discovers a creative innovation, it can be rolled out to all other stores within 48 hours.
Amanda Bialek, franchise marketing expert, summed it up best: “Franchising offers the opportunity to tap into the entrepreneurial spirit with the guidance of a great playbook.”
Related: Aspiring Entrepreneur? Consider refining something that has already been built
Myth no. Fact #3: Franchises are not local and are not intended for certain people or types of businesses
Some people see franchising as an extension of a large company. But in most cases, franchise brands are run by individuals in the community, your neighbors, who are looking for a path to ownership and entrepreneurship. These locally owned and operated franchisees then create jobs and social impact, generating community benefits.
Likewise, there is a perception that franchising is suitable for people who have accumulated a significant amount of capital and are looking for a stable business opportunity. But today’s wave of affiliates is younger and comes with new ideas on how to stay in touch with new trends.
Edible Arrangements is seeing a trend of young franchise owners using Internet-based tools to connect with customers. Franchisors launching a new brand may also be younger. Cousins Jim Tselikis and Sabin Lomac teamed up to found Cousins Maine Lobster in their 20s and 30s — and secured a 15% equity investment from Barbara Corcoran on Shark tank.
Just as young people shouldn’t overlook franchising, neither should people interested in businesses outside of typical restaurant brands like Panera or McDonald’s, which people often think of as franchising. While franchising is an excellent model for the food industry, many other businesses, from gyms to emergency centers to car dealerships, have found success in the franchising model.
The big message: Franchising is much more local and expansive – in terms of who the entrepreneurs are and the types of businesses they run – than you might expect.
Related Article: Is Franchising Right for You? Here are 4 questions to help you decide.
Franchising could be right for you
Franchising offers the opportunity to leverage a proven brand or service to get results. It offers the opportunity to be entrepreneurial. Offers Room for Growth: Multi-unit franchisees now account for the majority of franchised units in the United States. And despite perceptions, many types of people and types of businesses can embrace franchising.
Whether franchising is right for you depends on your goals, objectives and the quality of the franchisor. Regardless, success in franchising requires grit, leadership and an entrepreneurial mindset. With these in hand, franchising can offer a resilient path to economic success.