Debunking Franchising Myths: A Closer Look at the Realities of Business Expansion

Franchising has become a prominent avenue for business expansion, yet misconceptions about this model persist. In a report by Moody’s Analytics, the authors dismantle three common myths surrounding franchising, emphasizing its potential for companies to scale and entrepreneurs to create economic and social value.

The International Franchise Association’s findings indicate that American franchises surpassed $825 billion in sales in 2022, underlining the significance of franchising in the business landscape. Despite this, prevalent myths about the industry persist, hindering a comprehensive understanding of its benefits.

Myth #1: Franchising can succeed on autopilot

The report challenges the notion that franchises run themselves, emphasizing the essential role of franchisees in navigating challenges, from real estate selection to operational management. Success in franchising demands grit, resilience, and an entrepreneurial mindset, dispelling the idea of semi-absentee ownership.

Myth #2: Franchising isn’t entrepreneurial

Contrary to the perception that franchising lacks creativity, the authors argue that scaling an existing idea requires as much innovation as starting from scratch. Franchisees, like Dunkin’ Donuts owner Neal Faulkner, often engage in various entrepreneurial tasks, contributing to the brand’s growth and experimentation.

Myth #3: Franchises aren’t local and aren’t meant for certain people or types of businesses

The belief that franchises are corporate extensions is challenged, highlighting the prevalence of locally owned and operated franchise brands. The authors emphasize that franchising caters to a diverse range of entrepreneurs, including younger individuals with fresh ideas and those outside the typical restaurant industry.

The big takeaway: Franchising is a multifaceted model that extends beyond conventional perceptions, making it a viable option for various entrepreneurs and business types.

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