Ethics in Franchising Considered

Ethics in Franchising Considered

Many people want to get out of corporate America and get into their own franchise business as part of their American dream. They would rather control their own destiny than be controlled by corporate America. However, sometimes that American dream can turn into an American nightmare.

Of course franchising has a lower failure rate and someone who starts their own business from scratch, but still the franchise buyer must be wary of the Franchisor's methods and motives and consider the ethics of those running the franchising company.

Many franchise systems could care less how much money the franchisee makes, they only care how much products they sell to the franchisee, which then in turns sells those products at retail to the customer.

For some franchising companies is only a method of distributing their products into the marketplace and a way to propel growth of their brand name. Franchising doesn't work very good for that and it can or good for the franchisee as well if the franchising company is ethical and forthright and cares about their franchisee team.

I have seen a few franchising companies which have no profitable outlets and very few which ever achieve return on investment or breakeven point. This is a common scenario that I have seen in franchising. I think franchisors should be more noble, due to the incredible responsibilities. Yet the most noble are often the most attacked by their competition, a franchise lawyers and even government regulators.

There is one fast food franchise, which costs about $168,000 I think to open and unfortunately the average store only makes $1,600 per month profit? That is scary indeed. If that is all it makes you are better off to keep your corporate job, we certainly will pay you more than that. Ethical Franchisors are serious about their business model and the profitability of their team members the franchisees. Please consider all this in 2006.