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The Three Scariest Things About Being a Franchisee

News, Articles, Success Stories and Advice on Franchising
The Three Scariest Things About Being a Franchisee

The Three Scariest Things About Being a Franchisee

Halloween’s just around the corner, so it’s the ideal time to talk about the top three scary things that come with managing your own franchise outlet. There’s probably a reason you opted to buy a franchise: maybe it was too long spent well within your comfort zone; no challenges; feeling life is passing you by. Mankind was meant to be a hunter – he/she thrives on adrenalin rush. A good exercise to do is to project yourself ahead five or ten years and then look back at what you wanted to achieve. Have you? If you haven’t, those years might seem awfully wasted.

These are the most commonplace fears we all have – and we offer some tips on how to address them:

Fear number one: Losing all your capital

Especially if it’s your first business venture, it takes courage to outlay such a large amount for the upfront franchise fee and then take out a small business loan. There’s also the matter of signing a lease. You’re going to have self-doubts and regrets. Often, the rumour is you have to be a multi-millionaire to own a franchise. There are plenty franchises that cost under a million, a total investment that encompasses equipment, franchise fees and inventory to operate the business. Make sure it’s within your budget.

Then ensure you are the right match for the franchise. Check how well your professional skills, personality traits and budget are aligned with the franchise you’re interested in purchasing.


Do thorough homework and research before you sign a cheque. The more preparation you do, the better the chance of success as a franchisee.

Fear number two:  Not having enough customers

Remember, you bought the franchise to get out of a rut or comfort zone. It’s not going to be easy – easy isn’t what you wanted. Often, when you open your franchise, with the help of your franchisor it will be with a grand opening celebration and customers milling about inside your shiny, new premises. This may lull you into a false security. There’s a feeling of excitement in the air: You just know this is going to work.

One thing is certain: there will be slow days or even weeks. Watching the bills accumulate and no customers in the store is truly scary. What if you can’t pay your rent? What if you can’t meet payroll?


A risk management mantra is to hope for the best, but plan for the worst. That should be your operating basis. Put aside some emergency funds for slow periods so you can meet your expenses. That way it won’t be as scary when there’s a business slowdown.

Fear number three: The franchisor goes into liquidation

It’s a rarity but it does occasionally happen. The answer as to whether this is a realistic fear is that it depends on the franchise group you chose. If you opted to take a chance with getting in on the ground floor with a young franchise concept (anything less than two years old), then you should seriously recognise the risk you took and prepare for the potential. Consult a franchise attorney before you sign your agreement.

Because they’re young, they don’t have much of a track record yet, so you may not be able to talk with many franchisees as part of your research. In the case of older franchise chains the potential for bankruptcy is part and parcel of your research.


Do as much research as possible; talk to current franchisees and look at comparable business models to see how they have fared. Also, consult with professionals as to the viability of the franchise business.

In conclusion

Owning a franchise is not for the faint hearted. The idea of being your own boss plus the upfront costs and obligations, can be downright terrifying. Don’t stop with these three questions – in your research there are many other questions to consider: total operating costs; insurance; the relationship with the franchisor.

If you’ve done the research and properly prepared, franchise business ownership will not only prove it’s not as scary as you thought, it’s also likely to become a very rewarding personal and professional future.



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