Franchises often grow in times of economic recession, when newly laid-off workers find people have taken early retirement from the job cuts and the company as an opportunity to improve their financial prospects.

As a result of the economic slowdown, many unemployed people to start looking on their own, including the ability to franchising.

If you are currently investigating franchise opportunities, this article will be available to you with what you know before signing the franchise agreement.

Myth № 1 Start – A light that the existing business model franchise

While most franchise opportunities that offer you everything you need to start not just a franchise. Hard work and long hours required, and there are many factors that determine the success or failure of your franchise.

“These are real – and elsewhere – to deceive the franchise: This is a franchise in the number of system colors that you are not successful entrepreneur, franchise, is infallible and that if you have one, sure of success. “said Mitchell York, author of” Franchising: freedom or imagination? ” essential reading for all would be franchisees.

More than four decades, the International Franchise Association, stressed that the concessions will be much more successful than independent small businesses. IFA studies in the United States show that 92% of franchise businesses are still operating after 5 years compared with only 80 percent of the national bankruptcy rate. However, there is enough evidence to discredit this claim.

Take U.S. franchise research by Timothy Bates, Wayne University, a government “Economist” painted a very different picture out. Survived after 4 years only 62% of franchise businesses, while 68 percent were small, independent developers still open for business. And independents are much more profitable. The return is even negative, on average franchise business in four years, which brings us to our second point …

Myth № 2 – the benefit of franchise

Take, for example, say you invest in a franchise of Taco Bell. Operating only one unit, most likely only be used somewhere between $ 25,000 and $ 45,000 at the end of the year – not much money for someone who has earned the level of executive pay. The real way to make money with your own Taco Bell, have units. After his company at this level can really know what to do. Do you have the skills, the company from 5 to 10 units for rental and management of personnel and create an appropriate role for himself as an owner? These are not issues that comes with the franchise operations manual?

One of my colleagues has been a failure of the franchise. Their initial investment was approximately $ 150,000. During the first year or so, invested another $ 100,000. It is very unusual. Then the economy collapsed, and is a business. He finished with a debt load of $ 250,000.

I always recommend that if you were to buy the series, actually a lot of money. Buy a big initial investment is just the beginning of the costs. Be patient. The benefit is much more than you think. The reality is that losses and endure the setbacks and move forward – not to stop them! Most small businesses in the area due to lack of cash flow – usually just the time the verge of success.

Myth № 3 – Franchises are low-risk investments

Any smart investor or entrepreneur knows the risk is always part of the equation. But the risks of starting a franchise can be much larger than what to believe. Perhaps the most important question is how much you’re willing to lose? Its massive investment is like a big risk.

A franchise can be anywhere from $ 10,000 to literally millions of people. In addition to the franchise fee, has a budget for all aspects of materials, equipment and signs, furniture, lighting needs, accessories, etc. Your franchisor and training costs and attorneys’ fees for their original investment.

At the top of the initial investment and the creation of the charges they will current concession rights. I know of a franchise that does not require ongoing monthly and / or annual fees. This is often disguised under various names, including fees for the sale, advertising and administration costs just a few. Make sure you fully understand your financial obligations, which can take several years to recoup a major investment and you know exactly what you need. Do not forget to provide a detailed budget and an emergency plan in case you do not benefit as expected.