Are Franchises Taking Over? How Do They Effect Your Business?

SeanATL

I don't really think franchises are "taking over", but.....

I was reading the thread below in the Business forum (oops, won't let me post the link....its at the top of the Business forum). It talks about national brands having a big impact on our businesses in the future.

I do believe we are a society who values large, brand names.

What do people in the painting business think about Franchises coming to town. I saw someone post something about 360 coming to their market and it made them nervous. CertoPro is also a large, national franchise who certainly seems to have an impact.

I see two HUGE advantages they have. One, they have national buying power. They certainly get their product and tools much cheaper than a mom and pop shop.

Second thing, and i don't really see this right now in the painting business, but maybe 3 years from now, but a national "brand" is big. People like buying things they know. If you have a large, well known brand, people are more trusting and more likely to work with you. People feel they have more recourse with a national company....thus the reason people are so comfortable with letting home depot paint for them (although they probably don't realize there's not much recourse with HD).

There are obvious advantages mom and pop shops claim, like better service, more personal service, etc. That may be true, but that is counting on your competitor not being able to execute his business. That's generally not a good business plan. I'm sure people said that about Home Depot.....they execute pretty well and have put a lot of people out of business.

What are you thoughts? Is there anyone on the board who would even consider getting involved with a Franchise in order to leverage these advantages in the future?

EMCustom

I have owned a franchise business (not painting) so let me give you my general perspective. Franchises do have their advantages, especially to people who don't know how (or don't want to learn how) to develop a business plan of their own and figure out everything that goes into running a business. You are buying into a proven business model that if you follow it properly you are very likely to be successful. A great idea if you know nothing about the industry you're getting into. You also have the benefit of a national brand to stand behind for name recognition.

However, there are some negatives (at least as I'm concerned) to owning a franchise as well. Every franchised business does things a bit differently but here are some things I'll throw out:

1. you may be buying a licensed territory, which can limit the geographic area you are "allowed" to market your company. if there are no territorial limitations, you may be competing with other licensees in the same geographic area

You generally have to follow their rules and guidelines, whether you like it or not

You may also have to buy some/all of your equipment/supplies from them, like it or not

You will have to pay licensing fees and/or royalties that may be (or at least seem) excessive. And if you have a bad month, they will still expect to be paid

Your 'training' may be a one to two week crash course in running all aspects of the business, which is frankly inadequate. typically you will be learning the ropes on the street. Levels of support from the franchisor can also vary greatly.

You will pay your share of any national advertising campaigns, and will still have to do all the marketing yourself at the local level. Simply having a franchised name on the side of your truck isn't going to make the phone ring

In the end a franchisee can call hiim/herself an entrepreneur or independent business owner, but they are still working in some part for some bloated corporate beauracracy.

in the end I decided I did not have the personality to own a franchise and never really felt like i was working for myself, but it does work for alot of people
just my two cents

SeanATL

thanks for the response. That's some valuable info.

Brushslingers

That was me, and let me again restate, I was not, and am not nervous, was merely asking for info. In fact, i'm doing a bulk of his work right now, nice not having much overhead and still making my margins +. I will say once again, you compete with NOONE, only yourself. You either make it, or you don't... noone is to blame, no franchise, no bigbox... nothing. Do a search in your area for construction... if you don't get at least two hits, look further out... personally I can get 200 hits here at any time.

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Benn