Franchises & Their Drawbacks (General)

A few months ago I talked to a franchise broker. This is a person who represents a lot of franchise companies, and who tries to match entrepreneurs with the perfect franchise.

My thought process was something like this. "I have good business sense, and I'm creative. If I purchase a business that has all of the detail worked out for me (franchise), I could probably run it well enough to make a solid profit."

I think a lot of people probably feel the same way, and they are absolutely right. If they are good at hiring the right people, and have a keen business sense, they could easily run a business that has already been set up. This is the positive side of franchises.

However, franchises have some significant drawbacks.

1. There are franchise brokers. Any business that needs someone to sell it has to be questioned a bit. Plus brokers get commissions, and franchise owners get fees. So the business starts with an extra expense.
2. Capital requirement. They want you to have a high net worth ($100k minimum) to start most franchises. This rules out most young people.
3. Less control. Franchises do most of the work for you on finding a location and getting things set up, but that also means that the owner doesn't have much freedom on many things (pricing, hours, decoration, branding, etc.)
4. Capital requirement. They also want you to have at least $50-100k in cash or liquid assets. If I had that much money to start a business, do you think I would need your franchise?

For these reasons, I will leave franchises to Baby Boomers who have lots of cash and are in career crisis. That's who these franchise brokers seem to be targeting anyway.