Barriers to owning a franchise

Five Common Barriers to Owning a Franchise Business

Franchising / October 28, 2021

By Kris Simonich, Vice President of Franchise Development, P3 Cost Analysts

Starting a business is an intoxicating dream millions of Americans share. Last year alone, entrepreneurs launched a record 800,000 new U.S. companies, capping a decade of steady growth in new business starts. These numbers speak to the inherent optimism of the American business owner and the powerful allure of ditching the traditional nine-to-five for a more promising future.

One of the most common ways new business owners enter the market is by purchasing a franchise. Under this arrangement, a person pays a franchise fee to an existing company, gaining the right to do business under their name. While this approach certainly has its benefits, it also brings many unique challenges that aspiring business owners should consider before making the leap.

Don’t Underestimate the Challenges

Every year, P3 Cost Analysts brings a new slate of franchisees into our business. That experience affords us a unique insight into the barriers many new franchise owners face. These issues won’t prevent motivated entrepreneurs from finding success. However, every potential new business owner should begin this journey with a clear understanding of what they’re about to undertake.

Barrier #1: Franchises Are Expensive

Even if you’re operating under a well-known brand name, a franchise won’t make money with the flip of a switch. Not only will you need money for the franchise fee, which can often be costly, but you must also pay for your expenses during ramp-up. Those costs could include labor, supplies, equipment leases, rent, marketing and dozens of other line items you’ll need to pay before you even meet your first customer. That means you’ll have to bring money to the table before purchasing a franchise.

Even at P3 Cost Analysts, where the franchise fee is relatively low and owners don’t have many operating expenses, we recommend new franchisees have at least one year’s worth of resources to sustain themselves as they launch their businesses.

Barrier #2: Hiring is Hard These Days

If you pay attention to the news, you know that job openings are at an all-time high and we’re shifting to an employee’s market. Intense competition for workers is driving up wages, prompting employees to leave their current positions for better offers and leaving job openings unfilled for longer. When you’re launching a new business, one of the central questions is always, Will I find enough good people to do the job right? The current hiring environment only serves to amplify those pre-existing anxieties.

P3 Cost Analysts franchise owners don’t share these same hiring concerns. The bulk of our auditing work occurs through our headquarters. That leaves our franchise owners free to focus on making contacts and generating new business. In fact, many existing franchisees enjoy that they can develop large, recurring revenue opportunities without managing their own teams. Owners that wish to grow their businesses through hiring can do so free from the risk and exposure that traditionally comes with scaling.

Barrier #3: You’re Not Buying a Brand

Many new franchise owners make the mistake of believing they’re buying into a brand. But when you stop and think about it, how many American brands today are truly recognizable or unique? Unless you can buy an iconic name like McDonald’s or Starbucks, purchasing a franchise is actually about buying a proven system. As a result, your success will depend on how well you leverage that system for your benefit.

Those systems do hold real value, though. For example, P3 Cost Analysts has spent 30 years developing our auditing and cost-saving techniques. Our franchisees gain all that experience and get a three-decade head-start over launching a business themselves.

Barrier #4: The Cost of Failure is Impossible to Quantify

Every franchise has a specific price tag. However, many people believe they’d be a sucker to pay that cost and could instead start their own company for much less. These entrepreneurs don’t realize that the cost of trial and error is baked into that franchise fee. Franchise businesses like P3 Cost Analysts have spent years experimenting with products, marketing techniques, hiring practices and other business processes. Small businesses that start from scratch have to go through that process on their own. And because it’s impossible to predict how long it takes to figure these things out, it’s difficult to accurately forecast the actual price of trial and error. More often than not, mistakes will be much more expensive than a franchise fee.

Barrier #5: It’s Hard to Leave Comfort and Security Behind

While the nine-to-five struggle is real, it also brings no small degree of comfort and security. So long as you’re not a terrible employee, you’ll probably keep your job and continue collecting paychecks. That predictability makes it very difficult for some people to move into the less secure world of entrepreneurship. When you own your own business, success or failure rests on your shoulders alone. You have to keep pushing, or else everything stops.

In many ways, this is where dreams and reality collide. Many people can fantasize about owning their own business. However, far fewer have the focus, drive and discipline it takes to build a successful business.

An Entrepreneurial Head Start

While these barriers will prevent some people from finding success, owning a franchise business is the closest thing to an entrepreneurial shortcut. Franchisees enjoy the support of seasoned professionals who’ve experienced the same challenges and can help chart a successful path forward. At the same time, they’re selling a proven system that has connected with customers thousands of times before. Those factors create a powerful edge franchise business owners enjoy over entrepreneurs who are truly starting from scratch.

If you’d like to learn more about franchise opportunities with P3 Cost Analysts, contact us by phone at 1-877-843-7579 or send an email to .

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