Quite simply, franchising diminishes risk. Established brands have credibility with consumers. Nationwide chains have brand awareness and visibility that has sometimes taken years to develop. Established business and operating systems help franchisees hit the ground running. And federal, state, and International Franchise Association (IFA) regulations ensure that franchisors are legitimate and honourable. All of these factors give franchisees a head start over an entrepreneur who wants to start his single-unit independent business.

Still, life in general is risky, and franchising, like everything else, isn’t a completely sure bet. There are always unknowns, and sometimes things don’t work out as well as planned, even by the best business plan. Even with the safety net provided by a sound franchise system, there are some risks of business you should take note!

Buying franchise opportunities are a huge purchase. Many franchisees have put up what for them is an enormous amount of money with the hopes that they will have a return on their investment. For some franchisees, the ability to work for themselves is worth it. But for others, especially those who want to make money quite quickly, they won’t be satisfied by their franchising relationship.

Franchises are also subject to business trends, and these are sometimes unpredictable. You may buy into a franchise system that sells this year’s gotta-have-it widgets, only to find that next year’s widget craze makes yours obsolete. The next fad diet may claim that your confection is entirely off limits, and your customers may flee you. Or a new technology may crop up that leaves your service looking primitive. Despite these changes, you’ll still own the franchise, and without some serious marketing or research and development efforts by your brand, your business may suffer.

Another risk relates to earnings. When investigating your franchisor’s UFOC, you may come across their earnings claim in Item 19. But make no mistake: this statement is no guarantee of earnings. This is merely a report of what other franchisees have earned. It doesn’t say that other franchisees in your area have earned this, or that they did so in their first year of business. It doesn’t say that every franchisee has earned this amount. Just like everything else about purchasing a franchise, this statement requires some investigation. The FTC does not mandate providing an earnings claim, so not all UFOC’s contain this information.

In addition, remember that as a franchisee, you aren’t in business alone. You’re taking a risk by entering into relationships with a franchisor, your employees, and your customers. And anything to do with relationships is always full of risk. We humans are always full of surprises. In business, disputes and disagreements will sometimes come up, and you’ll be forced to solve them. You’ll also need to communicate with your contacts at headquarters, so this relationship is also an unknown. And you’ll most likely need to hire employees, smooth things over with customers, and become a credible leader for your employees and in the community. You’d best be ready for these challenges.

Lastly, remember that in a sense, your friends and family are taking this risk with you. Hopefully, they’re there to support you as you take this great leap. But they may try to talk you out of your plans or put up a fuss when you’re busy with your new enterprise. They may resent that you aren’t contributing to the household income for a time, and they may worry about their own futures, too. If at all possible, you must have the full support of your loved ones as you take on the responsibility of owning a franchise. If not, be single-minded and focused, and don’t let anyone steal your dream.