Franchise ownership can be a smart and profitable pathway to entrepreneurship. It offers a turnkey model, name recognition, and built-in operational support that are hard to beat for first-time business owners. According to the International Franchise Association, the U.S. franchise sector contributes over $825 billion to the economy annually and supports more than 8.7 million jobs. Many franchisees thrive. Some even open multiple locations and build generational wealth.
But buying a franchise is not a golden ticket. Success is never guaranteed. Franchise ownership demands relentless due diligence before you sign the paperwork—and unwavering commitment after the doors open. Even then, there are “unknown unknowns” lurking that can derail even the most promising opportunity.
I know this firsthand. Eight years ago, I bought a business-to-business franchise, a sign shop. I opened with high hopes and a fierce determination to make it work. But I walked away—battered, wiser, and significantly poorer. I don’t regret trying. I do regret not knowing as much as I should have going in.
Here are seven of those lessons.
1. Earn a Ph.D. in Your Territory—Before You Buy
Failure to thoroughly analyze the territory I was purchasing was my biggest mistake. My franchise was business-to-business, and the franchisor structured territories based on the number of businesses within a specific geographic area. On paper, my territory hit the mark—there were plenty of potential customers.
However, upon closer inspection, many of those businesses proved to be unviable prospects: they were struggling retailers on a declining commercial strip, or professional offices that rarely required signage. I saw these red flags during my research. However, I focused instead on the lucrative potential of a handful of larger businesses in the territory that could generate substantial work. I told myself I was smart and clever enough to win with the hand I was dealt.
Moreover, the franchisor had already divided the metro area among multiple owners, and I was squeezed into a leftover patch, wedged between several veteran franchisees who had long-established customer relationships with nearby businesses. Two or three times a week, I’d see a fellow franchisee’s logoed vehicle drive past my shop on the way to install a sign in “my” territory. Compounding this challenge was that two independent sign shops had been serving the area for years.
By the time I figured all this out, I was already in too deep. The lesson? Never buy a franchise without extensive market analysis. Don’t just look at how many businesses exist—study their types, their quality, and their likely needs. Visit a significant number of the businesses and ask who provides the product or service you would offer, and whether they are happy with that supplier. And if the franchise is mature in your area, make sure you’re not entering a saturated market.
2. There Is No Substitute for Experience
When we opened, my team and I had exactly two weeks of formal training. We were bright and motivated, but we were green. As a result, we made a lot of expensive mistakes early on, during the period when we could least afford them.
We were competing with fellow franchisees and independent sign makers with decades of experience. They knew how to price jobs accurately, how to meet deadlines, and how to troubleshoot materials or installation issues. They had faster turnaround times, lower production costs, and established customer loyalty.
Even with the franchisor’s considerable support, the complexity of the business sometimes overwhelmed us. If you’re considering a franchise in an industry where you have no experience, assume the learning curve will be steep and that it will last a long time. You will need to hire smart, ask for help, and plan to fail forward.
3. Be Ready and Able to Prioritize the Business
You’ll often hear this from franchisors: “Expect to work 60 hours a week for the first year.” That’s more like the minimum commitment if you want to survive and thrive. A fellow franchisee in my market opened his doors two years before me. He has been very successful and still works an average of 80 hours a week. His wife puts in at least another 30-40 hours.
I bought my franchise during a turbulent period in my personal life. I told myself I could manage both. I was wrong. A new franchise requires every ounce of your time, energy, and focus. You are the CEO, the salesperson, the HR manager, and the customer service rep—often all in one day.
You can’t afford to check out emotionally or mentally, even for a week. If — and your loved ones — are not emotionally ready for you to grind like never before, you may not make it.
4. Budgets are Often Aspirational
Boxer Mike Tyson once observed that “everyone has a plan until they get punched in the face.” In my experience, the same was true for budgeting.
The budget templates provided by a franchisor will be a powerful tool, leveraging their extensive industry experience. Those numbers often assume ideal conditions, which rarely exist in reality. Get local quotes for labor, rent, insurance, and raw materials. And know that when something breaks (a printer, a delivery van), you’ll be the one paying to fix it.
Rent crushed us right out of the gate. Commercial space in my territory is extremely expensive, and I ended up paying far more than the amount suggested by the franchisor’s profitability models. We never escaped that anchor around our neck.
I entered a competitive job market and had to offer hourly wages up to 75% above the franchisor’s guidelines to attract competent employees. Then came material costs. Our already thin margins were further stressed by the U.S. tariffs on Chinese aluminum, which is used in many signs. We were constantly caught between raising prices and eating costs.
5. You Gotta Sell—Every Day
Business-to-business franchisors will correctly tell you that the ability to sell is crucial to your potential success. I was our only salesperson. That meant I was constantly pitching to local businesses, attending networking events, making cold calls, and following up on quotes. Even franchisees who hired dedicated salespeople still spent enormous time on high-level selling and relationship management.
If you’re uncomfortable selling—and don’t think that will change—you may need to rethink franchise ownership. Sales drives everything: revenue, cash flow, employee morale, and even your confidence. Without a steady pipeline, your business will wither.
Don’t expect leads to magically appear just because you bought into a known brand. Your franchisor will likely provide some powerful marketing tools. We generated a significant percentage of our revenue from inquiries that came through the franchisor’s online referral portal. However, our most significant sales — the kind that often stem from relationships or face-to-face interactions — were the result of my pounding the pavement almost every day.
If you don’t like walking into a business uninvited and introducing yourself, this life may not be for you.
6. Expect the Unexpected
COVID was the final nail in my franchise’s coffin. While our state declared sign-making an essential function and allowed us to operate during the shutdown, business largely dried up. Our monthly operating costs were just over $30,000, and for two months during the pandemic, we brought in no more than $10,000 per month. Our recovery, supported by extensive COVID-19 reopening work, was painfully slow and left us in deep debt, even after receiving two PPP loans.
And that was just the biggest of several unexpected setbacks. Our large-format printer, a core tool, broke down twice — once as a result of operator inexperience — causing us critical delays on much-needed work and costing thousands in repairs. The unexpected no-notice resignation of a skilled signmaker put us in a similar bind.
7. Know When to Fold ‘Em
In retrospect, I should have closed my business two years earlier than I did. But I was sure I could turn things around. After all, I had never failed at any other professional undertaking.
As a result of that unjustified confidence, I accumulated an insurmountable amount of debt and significantly complicated my post-franchise financial life.
Final Thoughts: Proceed with Eyes Wide Open
Closing my business and dealing with the aftermath was one of the most humbling—and educational—experiences of my life.
I don’t share this to discourage you. There are good franchise operations and countless successful franchise owners. Ultimately, I take responsibility for my failure.
But the franchise success stories you often hear rarely include the behind-the-scenes struggle it takes to survive, let alone thrive. Franchising is not a shortcut to independence or wealth. It’s a structured way to start a business, with all the risks associated with any entrepreneurial undertaking.
If you’re considering taking this leap, do your homework. Dig into every aspect of the franchise. Speak with current and former franchisees, particularly those who have faced difficulties or experienced failure. Study your territory. Study it again. Talk to potential customers. Understand your competitors, costs and personal capabilities. Complete all of this before signing your franchise agreement.
If it still feels right, go all in. But go in with your eyes wide open.
