Success Through Franchising? In Today\'s Volatile Economy,

¶ … Success Through Franchising?

In today's volatile economy, many are wondering how small businesses can survive. Big retail fast food companies want to make you believe that the spirit of small business entrepreneurship is still alive in the easier and more successful path of franchising. However, examining the evidence clearly shows that franchising is not as easily met with success that one would assume, illustrating that there is a higher chance of failure than success when opening a franchise.

There are many who believe in the power of franchises, and how they can empower the individual to embody the spirit of self-employment and small business ownership. Schlosser presents the opposition's argument very thoroughly in Chapter 4 of his work Fast Food Nation. "Success" illustrates the argument that franchising has long been thought to allow a greater path of success for many Americans. Essentially, larger fast food chains reach out to would-be entrepreneurs to sell their franchises. There are several aspects of franchising that the opposition support. They believe that franchising is supposed to provide an easier path to success through self-employment to franchisors, and at the fraction of the cost for actually investing in opening your own similar business. In fact, Schlosser shows that smaller retail chains often take only $50,000 to start up (Schlosser 98). Moreover, these franchising opportunities offer the support in a volatile economy that original businesses do not. The major fast food retailer helps set up the business and run maintenance. Overall, the opposition believes that this is the "safest way of going into business for yourself" (Schlosser 98).

However, when examined much more closely, it is clear that there are several major holes in the opposition's argument. Franchises are often not as easy to open as they are made out to seem. In fact, it is much more expensive to open and maintain a franchise that just the money in the original investment. Often times, franchisers are left picking up the pieces of wasted investments when the larger retail chain turns on them when profits are not high enough. Rather, they are more like traps that hinder would-be entrepreneurs from finding more unlimited success on their own. There are several major elements to the argument that franchises are not as good of an opportunity as they may seem. First, the large retail fast food chain really takes a huge bite out of profits, making it ten times harder for the franchise owner to secure a good enough profit margin. Here Schlosser provides the example of Subway franchising, a company which takes one-third of all annual royalties. Considering that the franchiser is left to pay operating costs, taxes, and all other expenses, that leaves just a small margin for profit for the individual franchiser, while Subway racks in millions just off of its name.