Have you thought about opening a franchise, but were hesitant because of what you've heard? We've heard some franchising myths of our own over the years, and we're happy to tell you they're just that: myths.
Franchising offers would-be entrepreneurs an opportunity to start and grow a business quickly and efficiently with the support of an established plan. We want you to experience that thrill and not let any misconceptions about the franchise business model dissuade you from chasing your dream.
So, let's put some of these franchise industry myths to bed and help get you on your way to business ownership success.
Myth #1: "Franchising Is Not Affordable"
The reality: You'll be happy to know there is a range of lower-cost opportunities and various financing options.
Financing is one of the top reasons that determines if a business will succeed. Franchise owners often find it easier to obtain a business loan or financing to cover franchise fees based on realistic financial planning and projections. In most models, the franchise owner pays an initial franchise fee, along with ongoing royalties in exchange for branding, support, and training.
Here are four of the most common ways to finance a franchise:
- Investment Account rollovers - If you have an inactive IRA or 401(k) that isn't growing as you'd like it to, you could roll it over to fund your business.
- Small Business Administration (SBA) loans - SBA loans operate similarly to commercial bank loans but with lower interest rates and longer repayment timelines.
- Home Equity Line of Credit (HELOC) - Many people have a lot of equity in their homes they can leverage to finance their new business with a HELOC.
- Personal Savings - Some franchise owners choose to launch their business from existing funds. This could also include funds from friends and family.
Remember that exact franchise start-up costs vary by brand, industry, and territory. Be sure to review the brand-specific Franchise Disclosure Document (FDD) provided to you for information on start-up costs.
While paths to becoming a franchise owner can vary, they all start with funding. The best finance options for you will depend on your individual circumstances, credit score, and personal savings. It's always worth seeking the advice of a finance professional or accountant before pursuing any of these routes.
Myth #2: "Starting a Franchise Will Give Me No Flexibility or Free Time"
The reality: Franchising with Neighborly® puts you in the driver's seat. You can be your own boss and control your schedule.
Aspiring entrepreneurs may worry that opening a new business means they will constantly be on the clock. That doesn't have to be the case!
At Neighborly, our franchise operations are built with balance in mind. Owners can work on reaching their professional goals, while having flexibility in their schedule to spend time with loved ones and do the things that bring them joy.
With a Neighborly franchise, you can own your own business and create the type of lifestyle you want. Some of our successful franchise owners even go on to open multiple locations, expanding their reach and revenue while maintaining flexibility over their schedules.
Myth #3: "You Need Industry Experience To Own a Neighborly Franchise"
The reality: Knowledge is helpful but not always necessary with the proper training and framework.
Support and guidance are some of the main advantages of a strong franchising system—where franchise owners receive a complete framework for marketing, operations, and customer service.
When you open a franchise with Neighborly, we train you and set you up with everything you need for sustained success. That includes:
- Marketing plan and materials - We have a dedicated marketing team that specializes in social media, digital initiatives, and local and national campaigns, offering owners a marketing blueprint.
- Operational/business support - We are proud to have some of the best coaches in the business. They work with our franchise owners to ensure they implement the business model correctly and run their organization as effectively as possible.
- Proven business models - By adopting our proven models for franchise organizations, business owners with Neighborly can see success quickly.
- Access to technology - Neighborly is committed to being well ahead of the competition, investing in research and development, and providing that technology to our franchise owners.
- Special discounts - Our owners have exclusive access to ProTradeNet® (PTN) for vendor relations. This program leverages the buying power of all Neighborly brand franchise owners to secure special pricing and negotiate rebates for tools, resources, and services.
- Networking opportunities - Our franchise owners can network and learn from each other. Many of our owners have been in the business for over 15 years, and they help guide other franchise owners on how to achieve that same level of success in the products and services they deliver.
- Reputation management - Responding to reviews and comments is time-consuming. Neighborly has a dedicated team that scours the internet and supports prompt responses to reviews.
Myth #4: "All Business Startups Have the Same Amount of Risk"
The reality: Franchising can actually be less risky than starting a business from scratch.
Opening up a traditional business has its exciting aspects, but statistics paint rather a grim picture. Research shows that 20% of start-up businesses don't survive their first year, and only half make it to five years in business. Compare that to franchises, only 4% of which close by the five-year mark.
When prospective franchise owners like yourself partner with Neighborly, your potential for success grows. We provide you with a tried-and-tested business model, which considerably lowers the risk of getting your own business up and running. Our focus is on positioning our owners to see the best results.
Myth #5: "Franchising Opportunities Are Only in Fast Food"
The reality: Franchise opportunities are available in almost every industry.
Fast food may be a primary sector for the franchise business model, but don't feel boxed (or, perhaps in this case, bagged) into that idea. As you explore your franchise options, make sure to expand your horizons to include all the potential avenues: automotive repairs, pet services, fitness centers, childcare centers...the list goes on.
Neighborly is recognized as the largest franchisor of home services. With a diverse portfolio of franchise brands, we empower entrepreneurs to choose a home services concept that best aligns with their skills and goals.
Why are home services so attractive? The average age of owner-occupied homes in the U.S. is 40 years old. With the age of these properties, there are more opportunities for repairs, replacements, fixes, and renovations. People will continue to invest in their houses, from necessary updates to long-awaited improvements, and we don't see this trend slowing down anytime soon.
Myth #6: "After Starting My Franchise, I'll Be Left On My Own"
The reality: Neighborly helps provide the support you need even after you open your doors.
One of the things we like to say in franchising is, ‘we want you to be in business for yourself, not by yourself.' With Neighborly, you have access to other franchise owners in our network and the ability to work with our vendors. We also have a team of 1,500 individuals located in our corporate and staff offices that are ready to help you with everything from marketing to supply chain management.
At the end of the day, it all comes back to one objective: for all of our franchise owners to thrive.
Myth #7: "A Franchise Model Will Limit My Creativity"
The reality: The right franchise system encourages innovation and invites owners to bring new solutions to their local markets.
While it’s true that franchise owners follow a proven business model, that doesn’t mean there isn't room for creativity. In fact, strong franchise systems thrive on collaboration from within their network.
At Neighborly, we think of our franchise owners as local leaders who bring fresh ideas and perspectives to the table. From tailored marketing efforts to building community partnerships, there’s plenty of room to innovate within the brand framework. We're open to franchise owner feedback and value suggestions that come from our owners in the field.
Myth #8: “Franchising Is Too Legally Complicated To Navigate”
The reality: While franchising involves legal documents and disclosures, a reputable franchise system makes this process clear and manageable.
The presence of a detailed Franchise Disclosure Document (FDD)—which includes information like audited financial statements and the scope of what the franchisor licenses to its franchise owners—is a sign of a well-established franchisor. This document lays out everything so you can make an informed decision before you invest.
At Neighborly, we guide you through each step of the process, striving to help you understand the franchise agreement, your rights, and your responsibilities. You’re never navigating this business-based venture alone.
Neighborly Helps You Move Beyond Myths & Toward Business Ownership
Franchising can feel overwhelming on paper and with so many common myths floating around. But as we've shown, these preconceived notions can often stand in the way of a rewarding path to entrepreneurship.
When it comes to franchising, we know there are many opportunities out there to consider. With Neighborly—a member of the International Franchise Association—you'll receive the help and support you need to make your business a success. Talk to a franchise consultant to get started and make your business ownership goals a reality.
