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Franchise Myth One: Franchising Is a Safe Investment

Is Franchising all It’s Hyped to Be? Achieving the Promise of Franchise Ownership

By Published On: March 4th, 2013

Part One of a Nine Part Series Exposing Franchising Myths.

Owning or purchasing a franchise is a life-changing decision that has huge implications for an individual’s finances, career satisfaction and overall happiness. The promise of franchising is business ownership supported by a proven brand, an established market, beneficial operating system and increased buying and marketing power.  In the current franchising marketplace, the promise is often not met by reality.  The conventional wisdom that franchising automatically provides these benefits is among several myths about franchising that are exposed in this nine-part series.

As we have explored in earlier blogs, franchising is not a decision to be made lightly or quickly.  The franchise model of product and service distribution can, indeed, deliver all of the huge potential attributed to franchising in general.  But these attributes are not automatic, and franchisees need to continuously monitor, advocate, negotiate and work to assure that the promise is delivered.  Franchisee associations are the primary vehicle and tool for franchisees to protect their right to a fair and balanced franchise relationship.

Many franchisees and prospective franchise buyers understand that all franchises are not created equal, and take the franchising decision seriously. They may spend weeks, months or even years reviewing potential franchise opportunities, requesting Franchise Disclosure Documents (FDDs) and insisting on a franchise opportunity that is sensitive to the interests of the franchise owner.  Achieving the promise of franchising takes careful analysis, effective negotiating leverage and skills, and good decision making.  Qualified counsel is essential to identifying, negotiating and advocating for essential interests, rights and protections. Often, a collective voice is the only way to assure that a franchise agreement will protect franchisee interests.

Over time, your franchise system, your franchise agreement and your relationship will evolve.  Whether the evolution favors or disfavors your needs is a constant concern.  For this reason, I urge investment in collaborative franchise cultures, where the interests of all parties to the relationship are respected and all parties have an effective voice in the evolution and success of the franchise system.  The existence of a strong and respected franchisee association is the greatest barometer and protector of a collaborative culture, and the prospects that the franchise agreement will contain vital protections for franchisees as well as your franchisor

During this series, we will delve into several common claimed attributes of franchising, which franchisors commonly broadcast and use to paint franchising as practically a no-fail solution to career success. That these franchising ‘attributes’ are automatic in franchising is a misnomer—myths that can be very misleading individually—and have led many to make personally damaging decisions when investing in a franchise. In this series, we will discuss how these potential myths can be turned into your realities through negotiation and vigilant defense of franchisee rights and interests.

These franchising myths are taken from my book, The Franchise Fraud, available in print and for the Kindle on Amazon.

Here are the myths you will be reading about in the coming weeks:

  • Myth One: Franchising is a safe investment.
  • Myth Two: Franchisees are in business for themselves, but supported by their franchisors.
  • Myth Three: Franchisees own their franchised businesses.
  • Myth Four: The franchisee gains a valuable asset in the trade name and trademarks of the typical franchise.
  • Myth Five: Franchising promises a proven business system.
  • Myth Six: Franchising creates a critical mass of market penetration.
  • Myth Seven: Buying a franchise means that you will lower the cost of doing business through the benefits and power of group purchasing.
  • Myth Eight:  Common myths about franchisee associations.


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Written by : Robert L. Purvin

Robert Purvin is the Chairman and CEO of the American Association of Franchisees and Dealers, a national non-profit trade association that is dedicated to supporting and protecting the rights of franchise owners. The AAFD's mission is to define, identify and promote Total Quality Franchising practices, and the AAFD supports is mission by: Promoting strong and effective independent franchisee associations as affiliated chapters of the AAFD. The development of the AAFD's Fair Franchising Standards, the most comprehenisve body of negotiated principles of recommended franchise practices in existence. The advocacy of fair and balanced franchise agreements and relationships that respect the legitimate business interests of both franchisors and franchisees for the good of the franchise relationship. The education of franchisees and prospective franchisees by the development and publication of the AAFD Fair Franchising Standards and the promotion of the AAFD Franchisee Bill of Rights.