“All Franchise Income Goes to Royalties” and Other Myths about the Financials of Franchising
The franchise industry is growing every day and more companies than ever are seeing the value of franchising as a growth strategy. Franchising is an incredibly smart and convenient way to start a career as a business owner; however, there are critics who spread a bad light and false myths.
Critics are spreading franchise myths—especially regarding the financials of franchising. As always, trust Pillar To Post to set the record straight and present the facts to our readers. Take a look at 3 of the most common franchise myths and learn the facts, so that you can make an informed decision when you decide to franchise.
Myth: All Franchise Income Goes to Paying Royalties to the Company
Many people are concerned about working within a franchise because they are afraid that all their profits will be paid to the franchisor and they will not be able to make any money for themselves.
Fact: Only a Small Percentage of Revenue Goes Toward Royalties and Fees
While it is true that the franchisor does collect royalties and fees for allowing franchisees to use their name, logo, products, services, and other benefits, these fees are nominal. At Pillar To Post, for example, our royalty fee is 7% of your franchise’s gross income. An additional 4% of your gross income will go toward brand advertising to help our brand garner attention, which in turn helps your franchise gain customers.
Myth: Starting a Franchise Is an Effortless Way to Make a Lot of Money
A common misconception with franchising is that when you join with a proven business model, you will not have to do any work to build your business.
Fact: Your Franchise Only Works as Hard as You Do
Even though a franchise company has established its viability as a brand, that does not mean that the individual franchise owners have no work to do. In fact, the opposite is true! Franchise owners have to work hard to find clients, market their services, manage finances, and so much more.
Building a business does not just happen overnight. If you invest in a franchise and assume that all the work is done for you then you are in for a rude awakening. Willingness to work hard is the most important trait of a franchisee. That being said, do not be discouraged by the amount of hard work that business ownership requires. When you are working for yourself and building something you believe in, that is the most satisfying work of your life.
Myth: I Can’t Afford to Start a Franchise
Starting a business can be expensive—from the startup costs to the rent and insurance to the ongoing expenses before your business starts making a profit. Often, prospective franchise owners are discouraged by the investment.
Fact: You Can Afford to Invest in Your Future
It is true that starting a franchise is quite an investment, costing anywhere from $30K to $2 million. But if you think of your investment in a franchise as an investment in your future, your career, your family, and your community, it seems a little more affordable.
Additionally, there are so many franchise opportunities on the market that you can find one to fit virtually any price point. Choosing a franchise that offers training, ongoing support, and other resources make the investment even more worth it because you won’t be going alone. As a franchise rated by Entrepreneur Magazine as a top low cost franchise, Pillar To Post would be a smart franchising investment.
With the popularity of franchising, it is understandable that some rumors would get started. Make no mistake that investing in a franchise is not a cakewalk—you will need to invest money, time, and hard work in order to succeed—but if you learn the facts surrounding some of these myths, you can see the benefits of choosing this path.
If you are looking for more information about the Pillar To Post low-cost franchise opportunity, learn more about us!