Is Franchising a Scam?

If you’ve seen the ads for Franchise Sidekick online, chances are you’ve also seen the spicy comments:

“Franchising is a scam!”
“You’re throwing money down the toilet!”
“Do it yourself, F off!”

In this episode of "The Sidekick Life," hosts Ryan Zink and Tyler Altenhofen take on the hate and the misconceptions behind it head-on. So, is franchising actually a scam? Or are people just misinformed about what franchising really is and how it works?

Let’s unpack the facts.

Why franchising gets a bad rap

The loudest critics usually know someone who “tried” franchising and failed. But here’s the reality: failure happens in all types of businesses. Just because one franchisee didn’t succeed doesn’t mean the model is broken. In fact, the system often works, when used correctly.

Independent vs. franchise business failure rates

The Bureau of Labor Statistics tells us:

20% of new small businesses fail in their first year
50% fail within five years

Franchising, on the other hand, performs significantly better.
Franchise SBA loans default 30% less than non-franchise loans
FranData reports that 85% of franchise locations are still open after five years
Those numbers paint a very different picture from the internet hate.

Misinformation is the real problem

Ryan and Tyler point out that most people don’t fail at franchising, they fail because they chose the wrong franchise or walked in with the wrong expectations. Too many buyers are talking to salespeople, not experts. And that’s why Franchise Sidekick exists – to bridge the information gap and set people up for success.

“You’re just buying a job”

This is half-true. If you only open one location and operate it daily, it can feel like a job. But franchising is designed to scale. The most successful owners build systems, open multiple units, and eventually step out of the day-to-day. That’s when the business becomes an asset – not just a job.

Time vs. money: What are you really buying?

Can you start your own business from scratch? Sure.

Can you build the brand recognition, systems, technology, marketing engine, and support structure a great franchise provides? Probably not in under 5-10 years.

That’s what the franchise fee is buying you: time. Time saved from having to build it all yourself.

Built-in community and scale

When you join a franchise, you also join a network of other owners, people who are incentivized to help each other, not compete. That’s a built-in mastermind that solo entrepreneurs don’t get.