Entrepreneur Magazine: What Makes Franchisees Fearful

Entrepreneur Magazine recently compiled a list of what make franchisees sweat prior to signing on the dotted line. While franchising allows entrepreneurs a support system, it can still cause deep rooted fears. The publication questioned more than 300 prospective franchisees on what their biggest fear was. Check out their answers below.

I’ll lose my investment — It’s not uncommon for franchisees to contemplate funding their franchise purchase out of their 401(k) retirement account, a high-risk gambit. For many, their initial investment is a substantial sum they couldn’t easily earn again, if they lost it. Ask yourself what you would do if this fails — where would that leave you economically? How would you recover?

I won’t make a profit, or profitability ramp will be too long — This in some ways can be worse than losing the business: You’re stuck toiling away in a franchise model that barely stays afloat, but doesn’t throw off enough cash to give you a meaningful income. Before it can become profitable, you may run out of money for operating cash. Ask hard questions about the ramp time — and ask existing and former franchisees, not just corporate.