“Franchise Ownership? There’s No Such Thing.” Veteran franchisee Jim Lager dispels the myth that franchisees are business owners. They own nothing, says Lager. The real value in operating a franchise is education & experience.
(UnhappyFranchisee.Com) Jim Lager has been a franchisee of three national brands over the span of four decades. The biggest misconception about franchise ownership, according to Lager, is that it exists. By Sean Kelly
Franchise sellers describe franchising as the safest route to the American Dream of business ownership.
“Tell me…” Lager asks. “What do franchisees own?
“The trademarks? No. The trade name they build recognition for over the years? No.
“The goodwill and customer relationships they take years to earn? No.
“Are they free to sell their business to whomever they like with terms that they decide? Definitely not.”
Lager says that when one reaches the end of their franchise term, it’s like turning over a leased car. You hand over the keys and walk away.
“You own nothing,” says Lager.
“You don’t OWN a franchise business. You RENT a franchise business.”
– Jim Lager
Lager’s insights are based on four decades as a franchisee of three national brands: Snap-On Tools, AmericInn lodging and a national mobile hose replacement service.
“There are benefits to renting a business,” says Lager. “As long as you know that that’s what you’re doing and why you’re doing it.”
“Operating franchise businesses has provided me with a business education,” says Lager. “Each franchise system I’ve been part of provided me with systems, tools and principles to run their business model profitably, and trained me in how to use those tools. They provided support in things like HR, inventory management, marketing and accounting. I have four decades of hands-on experience building multi-million dollar businesses. I could have never received that experience in school or on my own.”
“But could I have used that education to open a competing business?” Says Lager. “No way. The franchise agreement imposes a non-compete clause that makes it virtually impossible to open a competing business and use the experience and education I’ve acquired.
“A lot of my fellow franchisees are upset when they realize that, after decades building their business, franchisors rarely let a franchisee sell their business for more than the hard assets are worth. I wasn’t angry because I understood the business wasn’t mine to sell.
“Understand, it’s the franchisor’s field, their ball, their referee and their ball game. Plus, they made up the rules.”
“You won’t get rich with a franchised business. But you WILL get educated.”
– Jim Lager
“Honestly,” Lager says. “Very few franchisees ever get rich operating a franchise business. But if they’re smart, they are going to get an education.”
“I’ve owned franchises from three separate brands. I followed their systems faithfully and diligently. Don’t get me wrong, I made a good living. But I didn’t get wealthy when the franchisors bought out my successful territories. That’s not how franchising is supposed to work.”
After four decades wearing a franchise brand, Jim Lager is now striking out on his own an independent distributor for Parker Hose Products in Dallas TX.
ALSO READ:
FRANCHISE DISCUSSIONS by Company
ARE YOU A FRANCHISEE, FORMER OR PROSPECTIVE FRANCHISEE? ARE YOU A FRANCHISOR OR EMPLOYEE OF A FRANCHISOR?
WE WANT TO HEAR WHAT YOU THINK. PLEASE SHARE A COMMENT BELOW.
TAGS: franchise, franchise opportunity, franchise complaints, franchise advice, franchise opportunity, how to buy a franchise, buying a franchise, Snap-on Tools, AmericInn franchise, Why Smart Franchisees Fail, Why Smart People Fail, unhappy franchisee
Recent developments have left franchisees worried and uncertain about their futures. To advocate for greater…
The Building Kidz Worldwide franchise is an opportunity to own a preschool & childcare center…
PAINT NAIL BAR has undergone some significant changes since franchisees contacted us with their complaints,…
U.S. Veterans magazine has removed JDog Brands as its #1 "Best Franchises for Veterans" list.…
More than 400 Veterans & military families who invested in JDog Brands franchises have failed,…
Genevieve McDaniel is a former franchisee turned franchise researcher, franchisee advocate, advisor and fiercely honest…
View Comments
Michael (Mike) Webster, last week a franchisee stated you me that the franchisor holds all the cards. I disagree, it’s the franchisee money that fuels the industry. I replied to that franchisee that I believe the franchisees hold the cards, they are just afraid to play their hand.
Keith Miller My position is very close to yours -- I think that the franchisee was referring to a specific bargaining problems regarding releases.
Michael (Mike) Webster, actually it had to do with a promotion. Franchisees, in general are against it, but in the end, still honor it. If franchisees really stood firm, and say 80% didn’t honor it, the promotion would quickly go away.
Keith Miller Hmm, odd.
Both Joe and I are against discounts -- in favour of some LTOs.
Promotions by franchisors which improve gross but detract from net are predatory devices.
In one of my early letters to the FTC (when I still believed the FTC was actively listening), I called it “indentured servitude.” That seems to fit.
I’m a writer. And I have experience making different arguments using language. That gives me the ability to quickly analyze the way others are using language to influence.
One thing I’ve noticed in franchisors’ written arguments to Attorney Generals’ Offices after they’ve been reported and the AG is questioning them, is that they use the idea that the franchisee is an independent business to blame the franchisee for any actions they don’t want to be held accountable for.
It’s a stupid argument, because obviously in the franchising world, franchisees are following franchisors’ business models, but that doesn’t stop franchisors from making it.
They want the best of both worlds. They want to be in charge of how the business is run. -And- they also want to blame the franchisee for anything that might be amiss in how the business is run.
Franchisors’ strategy is to make franchisees scapegoats. Franchisees must do as they’re told, but when something is wrong, it’s the franchisees’ fault for taking the action (as they were told) because franchisees are independent owners.
many franchisees don't understand that they rent the brand. And if you rent the right concept you can make a lot of money.
Joe Caruso but, they clearly do own their own business. They can make wealth that lasts for generations. And many, if not most, franchise concepts permit you to sell/transfer, but they may have approval rights.
Ron Silberstein CPA CFE you don't own the trademarks, branding, customer lists and may have something to sell if you have remaining years on the franchise term and/or renewals.
Joe Caruso in many cases you do own your customer list. Of course you don’t own the trademarks or branding. You didn’t develop them, either. It’s almost as if you are saying that it isn’t right, when it is perfectly right. You had the right to use someone else’s trademarks and brand. Most franchisees re incapable of developing their own business and concept Nd brand...as you know....and franchising allows them to be their own boss and be responsible for their own success. How many successful franchisees do you know (I know none) who have gotten to the end of their franchise term plus renewals snd has to just close down because the zor wouldn’t negotiate an additional term for them?
Ron Silberstein CPA CFE I am saying that it can be great and profitable to be a renter of an investment grade brand & franchise concept.