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Why Owning Franchise Units Will Not Make You Filthy Rich

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A precious gem
A precious gem
Some enter franchising with a bit too much hope – They dream of cutting their way into entrepreneurship and, since they buy a proven system, success is guaranteed and being filthy rich is on the surest path. The story ends happily ever after.

Unfortunately, if you were one of those people, I have to slap you to wake you from your day dream.

I have mentioned in my previous article that if you are not ready, you better postpone your intention to enter the world of franchising.

Being not ready includes a misconception about franchising and a false hope in becoming rich easily through franchising.

Why owning franchise units will not make you filthy rich

Owning one or multiple franchise units can lead you to financial independence that all entrepreneurs are dreaming of. However, if you aim to be very rich through franchising, think again.

Those who are filthy rich most probably include your franchisor, not you.

You see, franchising is pretty much resembles the gold rush era – An era where people are traveling the distance to look for gold. They bought picks and shovels and start digging with a hope to strike gold and become filthy rich.

Some pioneers do become rich, and some followers do become rich also. But did you know who are the richest of all? There are none others than the pick-and-shovel store owners.

Why the pick-and-shovel store owners are the ones who are filthy rich?

Pick-and-shovel store owners – In franchising world, the franchisors – are filthy rich because they provide you with the tools to dig for gold. In similar sense, your franchisor is the one who own the “tool” – in the form of a proven system – that is sold to you for a certain amount of money to help you “dig for gold.” – a.k.a. becoming filthy rich.

You could actually become very, very rich, but your changes are, to be honest with you, slim. Again, as a franchisee, you can be rich and financially independent. But unless you can start your own successful business and franchise your business in the future, financial independence is the most realistic goal you could attain.

A reality check to prepare you for franchising

Here is a reality check for you to prepare yourself for franchising: You must understand that you “borrow” the brand name and the system of your franchisor. You will never, ever, own the brand name, unless you are a shareholder of the franchise business.

By “borrowing” the brand name and the system, you are obliged to pay a certain amount of fee, both one-time (franchise fee) and recurring (royalty and/or marketing fee) – not to mention the marked-up supplier purchasing prices. Those fees are the main reasons why you can be financially independence, but can not be a very rich franchise owner.

Saying the above is not meant to undermine franchises and franchising – I fave franchising and will always be. The economy of scale made lower-cost product acquisitions possible and the viral/exponential factors in franchise business’ growth intrigue me.

What I am trying to do is to help you get on franchising bandwagon the right way, with the right mindset. If you are entering franchising with the right way, both you and your franchisor will be benefited from your partnership.

Ivan Widjaya
Wanna get rich in franchising? Be a franchisor 🙂
Image by LittleMan.