Are franchises scams?

Question

I am a shift manager at a smoothie franchise, and I've seen how a lot of these places operate. Corporate charges a nominal fee every year, like 6-10% of revenue, but they make a lot of money selling their brand of cups, employee shirts, seasonal employee T-shirts, among other items that must be bought from the franchise.

The amount of help and assistance the franchise gives is laughable. It's like a fan club. They send you promotional materials in the mail, and you have to hang it up. There is some sort of district manager, but other than that, you're on your own. If a franchisee wants to ask a question, he has to phone another one. That's crazy, is owning one of these things worth it? It doesn't seem like there's any point to owning a franchise.

Answer 1

Of course there is. You are paying a relatively small fee to be permitted the use of an established company's name, instead of trying to start up your own company from scratch. You will get much more business, or at least be guaranteed a much better chance of getting good business with a franchise of a well-known company than by starting your own which no one has ever heard of before.

Answer 2

When it comes to the cost start up of a franchise--it all depends upon the company. I have a friend who owns 3 Subway's and he told me that if I wanted to open one myself that it would cost me 10k for the franchise fee. That same friend and I had previously worked together at McD's and at the time(late 80's) if someone wanted to franchise a McD's you had to pay 1.5m just for the name rights plus the construction costs and then 3% of monthly profits to the corporation...

Answer 3

Corporate restaurant and food chain franchise founders don't share your view understandably. However, I can understand one's view of a franchise being a scam---but it's legal.

You hook up w/ the franchise founder's represenative and talk deal....and sign tons of paperwork.

You clear the construction site zoning and local red tape, they truck down the pre-fab building and materials--popping up a fully operational restaurant in less than two weeks!!!

The kick comes in when you see they don't really offer much business capital assistance. In their view, you got all the resources to make the ship sail---so sail it well.....or we'll force you down (often leaving you w/ some serious bills to pay). Nothing personal.....it's just business--backed up w/ political leaders owning hefty shares of THEIR stocks...a-hemmmmmm.........

Answer 4

there are many trick coming up like that for they are experts at human behavior and have the know how to manipulate such.Most people do not use their brains these days ( as in the past) -only copy others!