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The Most Profitable Franchises to Start Today

Steven Teo — Sat, 23 Oct 2010 16:32:06 +0000

Article Contributed by Ray Haiber

As a professional small business broker and franchise sales consultant I am often asked what types of franchise opportunities are the most profitable to start and own. From my experience there are a few common factors or characteristics that give some franchise business models a definite edge or advantage when it comes to the ability to consistently produce high profit margins. Some of these advantageous characteristics include having low overhead expenses, limited competition, and not offering a commodity type product or low barrier services. Below are a few franchise opportunity categories that share some of these characteristics and are generally regarded as having the right stuff to be very profitable.

Financial Services Franchises:

Franchises that offer financial related services such as income tax preparation, accounting, and consumer insurance services generally enjoy very high profit margins for a number of reasons. This includes low overhead expenses because of generally lower staffing requirements and no absolute need to rent high traffic (and expensive) retail space. And because they offer professional type services the barrier to entry is a little higher than starting the average home cleaning or janitorial franchise which helps limit competition. And last but not least financial franchises like insurance and tax franchises offer services that have the ability to generate repeat and residual income which can do wonders for the bottom line.

Medical and Health Care Franchises:

Medical and senior care franchises are well positioned to reap the benefits of an ever expanding market due to major and favorable demographic trends such as the inevitable aging of the baby boomer population. Traditionally health care and medical related franchises that offer services like assisted living, senior home care, and lab testing have very high profit margins and are generally considered recession resistant. These factors bode well for maintaining high profit margins for these generally non-discretionary services that will always be in demand for the foreseeable future.

Home Based Franchises:

Some of the most highly profitable small businesses I have ever worked with as a professional business broker were home based. In my opinion the benefit of not having the expense of a monthly lease payment can not be overstated in terms of bottom line profitability. Other profitable advantages of owning a home based business include no daily commuting or travel expenses, as well as certain tax advantages that could put more money in your pocket at the end of the year. Be sure to consult with an accountant or CPA for more details about the tax advantages of starting a home based franchise or business.

Internet Franchises:

Starting an Internet franchise business offers many advantages in terms of setting the stage for being very profitable. This includes the fact the most Internet franchise opportunities being offered today can easily be operated from a small home based office with just an internet connection, computer, desk, and a chair. Consequently your overhead expenses will be much lower than that of a typical brick and mortar retail franchise business because there are no lease expenses or expensive equipment and inventory expenses. And generally most Internet franchises being offered today are designed to be owner operated so there are no expensive staffing requirements either.

About Author:

Ray Haiber has 12 years experience as a professional business broker and franchise consultant. You can view Franchises For Sale across the USA here. Go here to research affordable and low cost franchise opportunities for sale. © 2010

Top Reasons Why Some Franchise Businesses Fail

Steven Teo — Wed, 20 Jan 2010 00:15:41 +0000

Opening a franchise business is widely regarded as a very effective way for the average entrepreneur to minimize their risk when starting a new business. In general terms I would agree that this claim is accurate. However, don’t kid yourself that just because you opted to start a franchise business that you are more or less guaranteed to achieve success. In my experience nothing could be further from the truth. Many new franchise businesses fail, and fail all the time. Below in my opinion and experience is a few of the main reasons why some franchise businesses don’t make it.
Poor Location:
For retail franchise businesses it’s all about location, location, location. In my opinion a marginal location with poor visibility and low organic traffic can often be an impossible obstacle to overcome when launching a new retail franchise business. Before signing any retail lease for a franchise location make sure you thoroughly investigate the organic traffic potential of the site including soliciting the opinions of other business owners in the immediate area.
Incompetent Ownership & Unrealistic Expectations:
Many new franchise businesses never stand a chance of surviving because the owner is just not capable of following the basic franchise system, or is unwilling to put in the hard work and make the necessary sacrifices required to succeed. Unfortunately as a small Business Broker I see this scenario arise all the time in the form of a phone call from a new franchise owner that wants to sell 6 months after opening. Many of these owners reveal that operating a franchise is not what they expected or it’s just too much hard work. In lot of these cases I believe the Franchiser probably never should have awarded a franchise license to some of these candidates in the first place. But at the end of the day it’s the responsibility of the franchisee to make sure they fully understand the commitment and hard work that’s required to succeed in today’s marketplace.
Brutal Competition:
Many new franchise businesses face overwhelming competitive forces from similar franchise concepts and independent businesses already entrenched in their target market. In some cases this includes competition from other fellow franchisees who have been allowed by the franchiser to open other locations in a relatively small market area. In short, it’s my opinion that many major metro markets are completely oversaturated with certain types of franchising concepts making it sometimes extremely difficult for new franchise owners to make a living and ultimately succeed.
Franchise Fad:
Inevitably there are going to certain hot franchising concepts that emerge in the market place that are ultimately going to fizzle out as a fad. Remember the meal preparation franchise craze? Maybe because I’m a guy, but I never thought this was a very compelling or strong franchising concept to begin with. But regardless of what I thought, it appears that the vast majority of meal preparation franchises that opened between 2002 and 2008 (under several different franchiser flags) have closed their doors already with many franchisees loosing hundreds of thousands of dollars in the process. The moral of the story is just because a new franchise concept is popular or hot doesn’t mean it’s a proven business model.
Under Capitalization:
One of the most common reasons I have found that a lot of franchise businesses ultimately fail is they are simply don’t have enough working capital to survive the initial start-up phase. It’s a fairly well known franchising fact that the majority of new franchise businesses are not able to show a profit until there second year in business. This is why it’s crucial to have adequate working capital in reserve to meet your operating expenses until you can reach profitability.
Summary: Please keep in mind that all prospective business buyers should thoroughly investigate any franchise or business, obtain all appropriate disclosure documents available, and seek expert consultation prior to making any investment decisions.
About the Author:
Ray Haiber has 10 years experience as a professional Arizona Business Broker and franchise sales consultant. You can view and research many different types of franchises for sale for sale across the USA here.

Franchisees Biggest Complaints with Their Franchisers

Steven Teo — Thu, 14 Jan 2010 00:00:50 +0000

It is inevitable that starting and successfully operating any small business today is always going to generate an ever evolving list of complaints and disappointments for most owners. Entrepreneurs that choose franchising as the means to open a small business will have many of the same complaints as independent owners do along with a few unique ones because they are ultimately bound to a long term relationship with their franchiser. Here are a few of the most common complaints I hear from franchise owners regarding their relationship and experiences with their franchiser.
My Franchiser Is My Competitor:
This is one the most common, and in my opinion most valid complaints I hear from some franchise owners. It is the nature of small business that you are going to have competitors, but when your franchiser is creating the competition and diluting your market share by opening multiple locations uncomfortably close to yours that’s a tough pill to swallow. Before signing any franchise agreement make sure you thoroughly investigate and understand the rights and restrictions for your specific franchise territory. This would include speaking to other current franchisees in your target territory and asking them to share their experiences with competition from other franchisees.
Those Monthly Royalty Fees:
I have found that many new franchisees are so excited about getting there location open that they often defer any concerns about paying monthly royalty fees. However, once the initial excitement wears off, and they are involved full time in the hard work it takes to become successful those royalty fees become a much more tangible reality and commitment. The biggest complaint I hear from some franchisees regarding paying royalty fees is that they feel the franchiser does very little or nothing in return for them. Whether that’s true are not (I have no doubt that it is in some cases) unfortunately at the end of the day it is ultimately the responsibility of the franchisee to adhere to the terms of the franchise agreement they signed. Before signing any franchise agreement make sure during the disclosure process you speak to as many current franchisees possible and ask them if they feel they are getting real value from the royalty fees they pay.
Too Many Restrictions:
I often hear complaints from some franchise owners regarding the number of operating restrictions placed on them by their franchiser. Many complain that the franchiser exerts onerous control on how the business can be operated and are often frustrated that they are unable to react independently to local market realities and demands. I am sure a lot of these complaints are valid, but I guess I’m a little less sympathetic to these types of complaints for the simple fact that the franchisee chose to buy into a franchise system with known controls and restrictions. Many of which have been proven to given the franchisee a greater chance of success- which is the essence of the franchising. That being said, I would advise before buying any franchise business you honestly ask yourself if you have the right personality to follow a pre-determined franchise business system and all its inherent operating rules and restrictions.
Oversold Potential:
As a Business Broker I have heard a number of new and established franchise owners complain that they felt they were oversold on the potential earning power of their franchise business. This is a tough complaint to validate because it is generally a known fact that most franchisers do not disclose their earnings and are generally very careful about discussing earnings potential for a typical franchise location. That being said in my experience sometimes the franchiser (or their sales people) along with existing franchisees can sometimes paint an overly optimistic picture about how soon and well a typical franchise location will perform. Your best bet to mitigate this potential disappointment is to speak candidly with current and former franchise owners and ask them if your expectations are overly ambitious.
Summary: Please keep in mind that all prospective business buyers should thoroughly investigate any franchise or business, obtain all appropriate disclosure documents available, and seek expert consultation prior to making any investment decisions.
About the Author:
Ray Haiber has 10 years experience as a professional Arizona Business Broker and franchise sales consultant. You can view and research many different types of franchises for sale across the USA here.

Owning A Restaurant Franchise

Steven Teo — Thu, 26 Nov 2009 00:00:27 +0000

If there’s one thing that everybody likes doing, it’s going out to a restaurant. Whether you have experience in the service industry or you’ve always been interested in owning a restaurant, a restaurant franchise might be right for you. Owning a restaurant franchise is one of the most sure-fire ways to have a successful business. People dine out based on brand recognition, and when you become a restaurant franchise owner you’ll be able to offer a familiar name and menu to customers.
When you’re looking for a restaurant franchise it’s easy to see the history of success that other people have had in different areas. By opening a restaurant business in a nearby area, you can capitalize on the success that the restaurant has seen elsewhere. This is especially true if you are opening your restaurant business in an area where there is a lot of passing traffic. Out-of-town diners are more likely to eat some place with a recognizable name than to try a local restaurant.
There are nearly a million restaurants nationwide and national sales for 2008 should reach $558 billion. Even in times of economic hardship, people still continue to eat at restaurants. 70% of adults surveyed say their favorite restaurant has dishes and flavors that are not reproducible in their home kitchens. Although there’s a large initial investment when opening a restaurant franchise, it’s not comparable to going into the restaurant business alone. When you’re independent of the franchise system you won’t have the added benefits of brand recognition and support from the home office.
As you probably know, there are many different types of restaurant franchises to choose from. You can choose based on cuisine, type of service offered or even focus on food specialties, like at Zoup. Zoup is a fast service soup restaurant franchise. It offers a healthy alternative to burgers, fries and normal fast service dining options. If you want a restaurant business like no other, this may be just the right one for you.
You may want to go with a more familiar restaurant franchise, like McDonald’s, Burger King or Carl’s Jr. These restaurant franchises offer a familiarity that come with an expensive price. If you’re married to the idea of owning a burger joint, Checkers may be right for you. Checkers is a drive-through restaurant franchise that focuses on burgers, fries and shakes. In a small but efficient space, your staff will work a double drive-through to provide quick service at a great price.
Restaurant franchises like La Salsa Fresh Mexican Grill offer ethnic food in a casual dining environment. In the industry since 1979, La Salsa is committed to providing fresh Mexican food with the added feature of a fresh salsa bar in each restaurant. Casual dining restaurants like La Salsa are growing in popularity and this type of restaurant franchise is sure to be a winner in your area.
About the Author:
FranchiseGenius.com is the largest, most comprehensive online directory of franchise concepts, with 1,700+ concepts summarized, and includes a franchise resource center full of objective and useful information.

Top 10 Franchises For Sale In 2009

Marcel Sim — Sun, 06 Sep 2009 15:16:42 +0000

Article Contributed by GlobalBX.com
Every year, Entrepreneur magazine names its top franchises for sale, gathered up into a list called the “Franchise 500.” By referring to this list, prospective franchise owners can determine the top franchise for sale in any number of categories—the best fast-food franchise, the best auto service franchise, the best do-it-yourself picture framing franchise, and so on. This publication also names the 10 best franchises for sale regardless of the industry they are in, and it is this list that offers the most coveted ranking of all. The “next hottest franchise concept” certainly has a chance to advance in the standings. But year after year, the same companies continue to dominate this list, mainly because they have superb brand recognition, a solid financial base, highly satisfied franchisees committed to excellence, and products or services that have stood the test of time. As Entrepreneur sees it, here are the top 10 franchise companies for 2009.
1. Subway
The top company on this list has gained a reputation for offering fresh, healthy food at very reasonable prices. They also come up with some very innovative national marketing campaigns to keep the name “fresh” in the public’s eye. Subway began franchising in 1974 and has more than 21,000 franchises in the United States. The company charges a franchise fee of $15,000, with ongoing royalties of eight percent based on gross annual sales. One’s total investment will run from between $78,000 and $238,000. Subway has franchises for sale in nearly every U.S. state.
2. McDonald’s
Ray Kroc took a California hamburger joint owned by two brothers and turned it into the world’s largest fast-food restaurant chain. Over the years, McDonald’s has been an innovator from the aspects of both service and menu items, inventing such concepts as the kids’ meal and drink tops with pre-punched access holes. The company charges a franchise fee of $45,000, with ongoing royalties of 12.5 percent based on gross annual sales. One’s total investment will run from between $950,000 and $1.8 million. McDonald’s has a franchise for sale to residents of every U.S. state, plus worldwide opportunities exist as well.
3. Liberty Tax Service
With the tax deadline of April 15 looming over the heads of U.S. citizens every year, more and more taxpayers realize that it pays to hire an outside expert to help them complete their filings. The company started as Jackson Hewitt Tax Service in 1972 (and began franchising a year later) and changed its name after buying out another tax business in Canada. The company charges a franchise fee of $40,000, with variable ongoing royalties based on gross annual sales. One’s total investment will run from between $56,000 and $70,000. Liberty Tax Service has franchises for sale to anyone living in the U.S. or Canada.
4. Sonic Drive-In Restaurants
This company started as a root beer stand in 1954 in Shawnee, Oklahoma, jumping into the franchise business five years later. Today there are close to 3,000 Sonic Drive-In franchises across the country. The company charges a franchise fee of $45,000, with ongoing royalties ranging from two percent to five percent, based on gross annual sales. One’s total investment will run from between $1.2 million and $3.2 million. Sonic currently seeks out residents of Canada, New Zealand and Australia, offering exclusive territories in its franchise for sale.
5. InterContinental Hotels Group
The flagship property in this massive chain is the self-named InterContinental, which include some of the most prestigious hotels in such world capitals as London, Paris, Vienna, Cairo, Nairobi, and many others. This hotel conglomerate also includes such familiar brand names as Holiday Inn, Crown Plaza, Staybridge, and Candlewood. There are more than 2,600 franchises in the U.S. alone, as well as another 800-plus in foreign countries. Franchise fees and total investments will vary widely, since every property is unique. The company charges an ongoing royalty of five percent based on gross annual sales. InterContinental has franchises for sale in Oregon as well as assorted worldwide locations.
6. Ace Hardware Corp.
The neighborhood hardware store is alive and well in the guise of Ace, a national chain that prides itself on hometown values and helpful personnel who can tell you the best way to paint a door or repair a fence. The company began in 1924 and became a franchise operation in 1976. There are currently more than 4,200 U.S. franchises. The company charges an application fee of $5,000, and one’s total investment will run from between $400,000 and $1.1 million. Ace Hardware has franchise for sale opportunities in all U.S. states.
7. Pizza Hut
In 1957, when this pizza chain started business as a single restaurant in Wichita, Kansas, no one would have suspected that it would grow into the largest pizza restaurant chain in the world. Today there are nearly 10,000 franchises in existence, including “express” and kiosk locations that expose Pizza Hut products to more people than ever. The company charges a franchise fee of $25,000, with ongoing royalties of six percent based on gross annual sales. One’s total investment will run from between $317,000 and $2.9 million. Pizza Hut has franchises for sale in Oregon as well as assorted worldwide locations.
8. The UPS Store / Mail Boxes Etc.
Mail Boxes Etc. started in 1980 as a competitor to the U.S. Mail and has since expanded to offer all kinds of services that include the sale of packing materials, copying and printing, mailbox rentals, and shipments of darned near anything to anybody who has a permanent address. Re-branded as The UPS Store – although it ships by other carriers as well – the company charges a franchise fee of $30,000, with ongoing royalties of five percent based on gross annual sales. One’s total investment will run from between $155,000 and $295,000. The UPS Store has franchise for sale opportunities in all U.S. states, plus various locations worldwide.
9. Circle K
This convenience store chain was founded in 1951 in El Paso, Texas. They waited until 1995 to begin franchising, but since then Circle K has seen its U.S. franchises grow to more than 450. Surprisingly there are nearly 3,700 franchises overseas. The company charges a franchise fee of $15,000, with ongoing royalties of four percent based on gross annual sales. One’s total investment will run from between $161,000 and $1.4 million. In a nationwide expansion mode, Circle K has franchises for sale across the United States as well as in assorted worldwide locations.
10. Papa John’s International
This pizza chain got its start in 1985 in Jeffersonville, Indiana. Papa John’s has more than 2,100 U.S. franchises and close to 500 on international soil. The company charges a franchise fee of $25,000, with ongoing royalties of five percent based on gross annual sales. One’s total investment will run from between $135,000 and $490,000. Papa John’s has franchise for sale opportunities in all U.S. states.
About the Author
Thinking of starting a business or buying a franchise for sale? GlobalBX.com provides a FREE business for sale exchange with over 32,000 businesses and franchises for sale. Get FREE information on all the top franchises today!

Franchise Direct reveals the list of Top 100 Global Franchises for 2009

Steven Teo — Fri, 21 Aug 2009 13:06:13 +0000

Article contributed by Franchise Direct
Franchise Direct, one of the world’s top franchise portals, has released its first-annual list of the Top 100 Global Franchises. Franchise Direct arrived at these rankings after examining thousands of franchises worldwide. Franchising plays a major role in the global economy, and this list highlights the franchise businesses that have best-invested in international development. Combined, they make up some of the world’s most best and beloved franchised brands.
Franchise Direct is perfectly positioned to examine the global franchise market, as it is a prominent player in international franchising and operates popular national portals in seven major economies in North America and Europe. Their exclusive study has wider ramifications for the franchising industry. The list was compiled according to an objective methodology that factored in a range of commercial matters alongside issues of corporate citizenship and best practice. Franchise Direct examined each franchise’s units, revenue and market position. It also weighed in its support and financing for franchisees, as well as its policy regarding environmental and social matters to arrive at its list of the Top 100 Global Franchises.
The Top 100 Global Franchises provide an insightful glimpse inside the state of the franchising industry in the current economic climate. For instance, the Top 100 is largely dominated by the top performers in the quick-service restaurant industry, with McDonald’s and Subway coming first and second. But the list also shows the diversity of the franchising system, with cleaning, internet and senior care franchises represented in the Top 100.
Franchising is seen by many as an American concept, but these rankings are also unique because they indicate the rising success of franchises outside of America. Fifteen franchises that are not based in America have cracked the Top 100, with franchises from Japan, Australia and Britain represented.
This list provides a blueprint for franchises considering international expansion.
While each franchise on the Top 100 has developed a clear brand identity, they all share a number of similar traits. Each has built its success on a clear business model that’s easy to replicate, a strong support apparatus, an ability to innovate and a sensitivity towards environmental issues..
Franchises are certain to play a greater role in the globalizing economy. Despite the global credit crunch, the world’s top franchises remain cautiously optimistic. This list shows that franchising continues to remain a vibrant economic force in America and beyond.

Evaluating Franchisor Support

Steven Teo — Sun, 05 Jul 2009 00:00:03 +0000

You’ve narrowed your search down to three franchises. All of them promise great support. How can you get a better idea of what you’ll really get from each of them?
That’s a great question. One of the main benefits of being in a franchise system is that you don’t have to figure everything out on your own. With a little research, you’ll find a wealth of information about levels of support. That information will help you pick the franchise system that’s right for you.
Before you get started, take a few minutes to think about the word “support” and what that looks and feels like to you. Does it mean someone holding your hand through the pre-opening phase, or does it mean someone handing you a manual and checklist and letting you go? Does it mean an “in-market” support person living in your market, or are you willing to accept less frequent visits from franchisor staff who fly in from a home office? The better you understand what’s important to you, the more likely you are to get it.
Next, check the UFOC for lawsuits, closures, and transfers of existing units. While not a direct indicator of level and quality of support, they can at least serve as an early warning system. If a company has high levels of lawsuits or closures, it’s a good indicator that you’ll want to look at everything a bit more closely – including support.
Then, review the list below to determine which items are most important to you. Once you’ve reviewed the list, start talking with the prospective franchisors and their existing franchisees. The more people you can talk to, the better. Also, look for support information in writing. Does the franchisor have manuals for training you? For training your employees? How often are they updated? Do people use them? If not, why not?
Remember that no franchise system is going to have everything. A young franchisor will often have fewer of these, and that’s why it may cost less to get into their system. A more mature franchisor will often have more of these, and that’s why it may cost more to get into their system. Here’s the list:
Protection of Intellectual Property
* Trademarks and copyrights
* Willingness and ability to protect intellectual property from infringement
Real Estate
* Verification of suitability of potential locations
* Preparation of construction documents
* Preparation of signage construction documents
* Relationships with contractors
* Lease negotiation
* Construction oversight
* Discounted pricing on materials
* Checklists to help keep you on track
Purchasing and Distribution
* Vendor screening
* Vendor negotiations
* Vendor management
* Getting the product to you
* Getting it to you at a cheaper price than you could on your own
Marketing
* Clear, intelligent marketing and advertising plan
* Branded marketing and advertising materials
* Ability to produce custom materials for you if needed; how much does it cost, and how long does it take?
* Development of a marketing plan for your business
* Guidance to help you maximize your return on investment on marketing dollars
* Grand opening support
* Regularly-scheduled marketing coaching
* Discounted pricing for media and printing
* Advertising cooperatives
Operating Systems
* Outlines the standard procedures for running your business. Usually in manual form.
Training Systems
* Initial training at the franchisor’s training location how long? How good will you be when you’re done?
* Ongoing pre-opening training; does the franchisor have pre-approved training locations, either franchisee or company-owned, where you can continue practicing what you learned at your initial training?
* Grand Opening Training; does someone come out to help you make the last push to get your business open? How long do they stay? How long have they been with the company and what is their level of experience?
Business Operations
* Visits from franchisor staff. How often do you see someone? What happens when they come?
* Back office support staff
* Maximizing profitability
* Budgeting and forecasting
* Local, Regional, National, and/or International workshops and conferences
* Trademarks and copyrights
* Willingness and ability to protect intellectual property from infringement
Enforcement of Standards
* How clearly do they communicate standards? Are they written down? Talked about regularly?
* Is there a clear, objective system for measuring compliance to standards?
* How often are standards checked to verify compliance?
* Once a franchisee or vendor is found to be in non-compliance, what action does the franchisor take, and how quickly do they take it?
* Do they leave flexibility for innovation within acceptable guidelines?
This article is contributed by: Franchise Genius
FranchiseGenius.com is the largest, most comprehensive online directory of franchise concepts, with 1,700+ concepts summarized, and includes a franchise resource center full of objective and useful information.

What Franchisors look for in Franchisees the Other Side

Steven Teo — Sat, 20 Jun 2009 00:00:36 +0000

The franchise sales process is kind of a paradox: both sides want the other to like them, to show that they are perfect for each other. At the same time, both the franchisor and the prospect want to make it clear that they’re looking for the perfect partner.
In other words, franchise prospects want to put their best foot forward but make it clear that this is only one of several possible choices and the franchisor wants to impress the potential franchisee, but make it clear that they are very selective in whom they choose to allow into their system.
So what is it that franchisors look for in prospective franchisees? Most franchisors talk of “awarding” franchises, rather than selling them. The difference is that they won’t sell to anyone. You must be someone who values the same things as the franchisor and be financially qualified. The franchisor is taking a risk by letting you into their system – here are some of the things they look for, either through explicit questions or by watching your non-verbal “answers” to situations.
Are you financially qualified?
You don’t have to have a six-figure bank account but you do need to a) show some resources of your own and b) show that you understand how to obtain money to cover franchise fees, start-up costs, and operating capital. You can do this through loans, friends, and partnerships. The last thing a franchisor wants to do is put someone in who doesn’t have enough capital to get over the initial customer ramp-up period. You make the cut if you show you understand how to obtain capital.
Are you self-motivated?
This seems obvious, and most potential franchisees would say that they are successful people who have always been self-motivated. Your house is on the line, after all, so of course you’re motivated to succeed. But this goes more to what happens when things are hectic or there are challenges unique to your area. Franchisors want to know that you’re motivated to seek help within the system (franchisees, business consultants, and other resources) – that you recognize this is your business. The franchisor has many tools and resources for you to use. But it’s up to you to ask for them and to implement them.
Do you have a passion for the product or brand?
Passion overcomes many obstacles. Franchisors want to know that you can be an evangelist of their brand, to promote the products and uphold the trade dress in your market. A passion for the brand indicates a franchisees willingness to overcome challenges, while still keeping the brand’s best interests in mind. Passionate franchisees are generally more successful than others who just “want to be their own boss.”
Do you just want to be your own boss?
Very often, potential franchisees will expound on how they would do things or offer tips as to how to make the system better. These tips are appreciated when they come from existing franchise owners, but most often are red flags during the franchisee selection process. A franchise system is just that – a system. Franchisors need to know that you are willing to work within the system and that you’re not just buying a franchise because you can get open faster and then do whatever you want (it’s your business…right? You can sell magazines and suntan lotion in your sandwich store if you want to…right?).
Good business partnerships are like good marriages and take just about as much work. If you do your research, and are honest during the application and selection processes, your new relationship will have a firm foundation.
If you’re out to impress the franchisor and you oversell yourself, there’s a good probability that neither of you will be happy with the partnership. Find what you love to do, then do it with passion.
This article is contributed by: Franchise Genius
FranchiseGenius.com is the largest, most comprehensive online directory of franchise concepts, with 1,700+ concepts summarized, and includes a franchise resource center full of objective and useful information.

Opportunities Brewing in the Coffee Franchise Sector

Marcel Sim — Sat, 13 Jun 2009 11:02:49 +0000

Article contributed by Franchise Direct
Franchise Direct, one of the world’s leading franchise portals, recently conducted an in-depth study of the coffee franchise sector. After thoroughly examining 29 Franchise Disclosure Documents, Franchise Direct has found that the coffee franchise sector is weathering the recession resiliently, bolstered by a product that is an integral part of American life.
Despite an early dip at the beginning of the recession, this $11 billion a year industry continues to grow and diversify, according to the Franchise Direct study. With coffee consumption remaining constant in this declining economic climate, coffee franchises continue to be a worthwhile investment.
According the study, the coffee franchise industry remains extremely competitive at the top and fragmented at the bottom. Starbucks is the industry’s leading coffee chain, with over 16,000 stores worldwide. Because of the accessibility and popularity of coffee, a franchised approach, boosted by an established brand identity, continues to be one of the most profitable options to profit on this product.
One of the most reassuring reasons to invest in a coffee franchise is the enduring success of the beverage. The Franchise Direct study quotes a recent poll that shows that coffee consumption actually increased last year among the lucrative 25-to-39-year old demographic, while it remained steady amongst 40-to-59-year-old’s. As the recession continues, we can safely assume that the popularity of coffee will continue unabated.
Coffee franchise businesses are also flexibly adapting to new American consumer habits. For instance, in recent years, there has been greater demand for environmentally-friendly products that do not exploit workers in the production process. Coffee franchises have been at the cutting edge of the Fair Trade movement, and with a range of organic goods, they are perfectly positioned to thrive on this developing $1billion industry.
The Franchise Direct study shows that location is the most important factor in a coffee franchise’s success. At the same time, mobile units or kiosks give prospective franchisees a low-overhead, high footfall alternative to the standard franchise unit arrangement.
Underpinning the recent success of coffee franchises is the growing popular consensus that coffee has a number of health benefits for drinkers. While perhaps once seen as unhealthy, coffee, as illustrated by authoritative studies conducted by researchers at Harvard and UCLA, clearly has health incentives.
People exploring franchises for sale will find that coffee franchises sell a product with broad public appeal that is seamlessly adapting to American consumer trends towards healthiness, social responsibility, and environmental sustainability.

Role of Franchisees and Franchisors

Steven Teo — Thu, 11 Jun 2009 00:00:39 +0000

Franchisees and Franchisors…the two work together to create and expand a successful business concept. So what role does each play in relation to the other?
The Franchisor
The Franchisor has built a successful business system and is willing to sell you the right to use that system, and all that goes with it, to begin your own business. An important distinction is that the franchisor is not selling you a business—he/she is selling you a right to operate a business using an established system.
The objective of the franchisor is the same as any other business owner—to increase the value of their business. In the franchise world, this is accomplished by selling the right to use their business model so that there are more franchise locations doing business successfully. In this way they expand their market reach, increase the value of the franchise, and the brand as a whole grows. As the number of successful units grows, the franchisor’s royalty stream (the percentage of profits they get from each unit) also grows.
It is in the franchisor’s best interest to continue to support you as you exercise this right to do business. Some of the things you can expect from a franchisor are:
* Professional national marketing and advertising materials and campaigns: they will manage the overall strategy of the brand.
* Management of products and services for the brand as a whole, including research and development of new products and services. A proven system of doing business.
* Protected territory from other in-brand units: in other words, they will manage how close your market area is to another unit so there are both enough stores to have good market coverage, and also enough territory for each store to generate the business they each need to operate successfully.
* The ability and option to own more than one unit.
* A network of colleagues.
* Frequently, a buying cooperative—that is, a group of people who together have more buying power and ability to negotiate prices than does a single business owner.
The Franchisee
The Franchisee is ready to start a new business, but may not have enough experience in running a business to be comfortable starting one from nothing. Most new businesses have a fairly high failure rate—sometimes due to mistakes made by inexperienced business owners, other times due to unexpected conditions in the market. What the Franchisee is looking for is a leg-up in starting a business so they have an increased probability of success. This is exactly what purchasing the right to use an existing business system and brand name provides them.
What you need to keep in mind is that this is your business, but someone else’s brand. It’s your responsibility to find and negotiate your lease or building, but the Franchisor will usually provide guidance. You are responsible for hiring and training all employees, but again, the Franchisor can provide helpful tips for recruiting and employee development. You manage all of the pieces of the business yourself, tapping into the expertise of those from whom you’ve purchased this system whenever you need advice. You can also expect the franchise to provide training in the methods of running your business according to the system they licensed to you.
What is important for you as the Franchisee to understand from the beginning is that while you are part of an entire franchise system and will work as a partnership, you are not actually a partner. This doesn’t mean that you have no say in how the business is run, but it does mean that your say is limited. In more established franchises, there is usually a franchise group that represents the franchisees’ interests and works with the franchisor to present ideas and resolve business issues to the benefit of the franchise as a whole.
If not quite a partner, the franchisee still can expect from the franchise those things outlined above. So what can the franchisor expect from you?
* Well…money, of course. You can think of it as leasing their ideas. Each month you will report on your financials and a certain percentage of the profit you make goes to the franchisor. They use this money to fund things like advertising campaigns and research and development of new products, and to grow the value of the brand.
* You to run your business according to their standards regarding products and services. Consistency from store to store is what brings customers into franchise businesses. A customer should expect to get the same product or service from that brand name regardless of which building they walk into. If you don’t, other units suffer.
It’s important to note that the services listed above are somewhat standard to all franchise systems, but the extent to which they are applied varies greatly. Your Franchise Agreement will explicitly state the levels of support you will get in terms of advertising, training, and other areas. If it isn’t in writing (in your Franchise Agreement) then it’s not required. Keep this in mind during your conversations with any franchise organization.
This article is contributed by: Franchise Genius
FranchiseGenius.com is the largest, most comprehensive online directory of franchise concepts, with 1,700+ concepts summarized, and includes a franchise resource center full of objective and useful information.