Franchising is a wonderful way to go into business for yourself. So many things have already been established for your benefit: branding, marketing, processes, products, systems, etc. Building a business through franchising has been so successful that franchised businesses generate jobs for more than 18 million Americans and account for 9.5 percent of the private-sector economic output, according to a study released by the International Franchise Association Educational Foundation.
If you are convinced that you want to investigate franchising for your next career move, how do you go about finding just the right one?
This is one subject about which much as been written. Everyone has their own version of what you need to do to find that one, perfect concept for you and for your market. At FranChoice, helping people find their ideal franchise opportunity is what we do. As a result, we have worked with thousands of people looking to find the right franchise and realize their dreams.
Here then is our recommended approach of determining what to look for in a franchise that will meet your needs, expectations and goals:
STEP 1
Before you start looking at franchises, take stock of that most important component of the equation – YOU.
• What skills, experience and interests do you have?
• Consider your past jobs and determine what you liked best and least about them; then make a list of your strengths and weaknesses.
• How much money can you invest and how much would you like to make?
• Are you comfortable managing others or would you prefer to work alone?
• Where do you want to work? Are you willing to relocate?
• What hours are you willing to work while the business ramps up and what lifestyle expectations do you have after the business is established?
• How do you feel about selling and the sales process?
By starting with a list of what you have to offer and what you need from a business, you can create a strategy and model for your research.
STEP 2
Keep an open mind. Whether (at Step 1) you use a resource like FranChoice or do your own franchise research via the Internet, it is best to keep all options open when considering a franchise.
An inexperienced person may approach the process by thinking, “Well, I love donuts. How about a donut franchise?” And after spending days or weeks of research on Krispy Kreme, Dunkin’ Donuts and others, the individual may find he doesn’t have the required capital, the territory he wants is not available, and he’d have to give up weekends if owning a food franchise.
Another ineffective way to begin your franchise research is to lock yourself in to one or two concepts. If you think, “I’ll only look at ice cream and exercise franchises,” you may miss finding that that gem of a concept that would mesh perfectly with your needs.
With thousands of franchise companies available, keeping an open mind is the best strategy you can employ to get on the ground floor of that new, hot concept or to find something that will really take off in your market.
STEP 3
Let’s say you’ve found an assortment of franchises that look promising. What do you do next?
Contact the franchisors and request information about their concepts. You will probably get call from someone in the franchise development department who will gauge your interest and advise you if the territory you seek is available. You will want to thoroughly view the web site information and any brochures and videos they send you.
Keep notes on your impressions. Are their materials professional and up-to-date? Are you treated courteously by a friendly and knowledgeable member of the corporate office? Are your questions and concerns answered to your satisfaction?
What you see from the company at this time may be an indication of the type of support you would receive as a franchisee in their system.
STEP 4
Your next step is to read the company’s UFOC (Uniform Franchise Offering Circular), a document every franchise in the United States is required to provide. From this you will learn the history of the company, the training and marketing programs, and what costs, royalties and fees you will be required to pay.
Some franchisors also provide earnings claims in the UFOC that will help you estimate the potential of the business.
The UFOC is full of information about the franchise and it clearly explains the responsibilities of the franchisee (you) and the franchisor. Your UFOC review and understanding is a very significant part of the research process.
By paying attention to what you discover in a company’s UFOC, you can weed out franchises that just don’t measure up. Some warning signs of a franchise that is facing challenges are extensive litigation with franchisees or a closing rate of units greater than what’s being opened.
STEP 5
We consider this step to be of monumental importance when judging the likelihood of finding happiness in a particular franchise: CALL EXISTING FRANCHISEES!
Existing franchisees are your best source of information for finding out what really happens in a business on a day-to-day basis. You can ask what they like and dislike about the business, if they are happy with corporate support, and even get a feel for the type of earnings a franchise makes.
Gather a variety of opinions and you’ll get a clear picture of not only the franchise itself but of how you’d fit into the organization. That is why this step is so significant to your being able to make a definitive decision.
STEP 6
Your next step is to narrow down your choices. Okay, maybe it’s not all that easy. Let’s review what you’ve done so far:
1. Made a list of your strengths, experiences and needs
2. While keeping an open mind, found some companies that look promising
3. Requested information
4. Reviewed the UFOC
5. Talked with existing franchisees
Hopefully you’ve now found one or more companies that will meet your needs.
When you’ve made it this far, it’s time to go to Discovery Day (an on-site meeting with a franchisor). At this meeting you will be introduced to the top people in the home office and you may make a visit to a local franchisee, allowing you to ask even more questions and maybe to get some hands-on experience with the business.
Discovery Days are very interesting and exciting. When you leave, you will have a good understanding of the franchise. Don’t forget that this is a two-way street. They’ll be evaluating you as thoroughly as you evaluate their business.
STEP 7
The last step, of course, is making the final decision. Like any major decision, you will be filled with anticipation and anxiety, excitement and fear. Those are very normal feelings, experienced by almost everyone.
But if you’ve done your homework and followed the steps as outlined, you should be very comfortable with your decision. Congratulations – you’re ready to be a franchisee!
Kimberley Ellis is the President of Bison.com, a leading online resource for franchise and business opportunities. She has been quoted as an industry expert in USA Today, Wall Street Journal and a variety of local and regional publications regarding trends in business and franchising. Kim combines her entrepreneurial spirit with a diverse background in marketing and operation to help others succeed in franchising.
Author: Ethan Theo
Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.
Has there been another time when you felt totally motivated in getting started on a project? A time when you just sat down and got it done immediately?
I believe we are aware that this situation rarely happens, never happening in times when we need to get something done.
We Create our States of Motivation and Procrastination
We have to understand that we create entirely different states using our physiology and internal re-presentation. When we understand this, we will be able to change, interrupt and change states whenever we need to.
When you were procrastinating, you were using your physiology in a particular way. Your breathing was probably slow and shallow. Your muscles were droopy, your eyes were looking down and your facial muscles were probably flaccid.
What about your internal re-presentation? You were probably seeing pictures of yourself having a tough time, being overwhelmed and getting frustrated. You were probably saying to yourself in the most weary and bored tone of life, “Must I do this now? Can I do it later?”
How do we create Motivation?
A question we have to ask ourselves, when we are in a motivated state, taking action and accomplishing our tasks, how did we create that?
Our physiology was probably different. We were sitting differently, breathing differently and moving differently. We were probably re-presenting the task very differently in our mind.
We were seeing ourselves getting results, having fun and doing things effortlessly. We were probably saying, “do it now!” “Let’s get it done!” in a more excited, higher pitched tone of voice.
Remember, our states are hardly managed consciously. We do not consciously shift our physiology nor do we control our internal re-presentations with the intention of controlling our states.
Instead, our minds are allowed to run on autopilot causing us to lose control of our own states, ensuing in mediocre results that we are not to be pleased about.
Now that we are aware that states of motivation and procrastination are entirely created by us, the responsibility is on us to learn and take charge of our physiology and internal representation, propelling us to attain the greater results we desire.
Perhaps the main motivation for potential franchisees willing to invest in a franchise or business opportunity is to escape the mundane world of “nine to five” working for someone else to fulfilling a long-cherished dream of business ownership. However it is naïve to think a franchise is the “perfect” business ideal. As with everything in life, there are both advantages and disadvantages, and in the case of franchising this is no different.
If you are aware of the pros and cons of investing in a franchise prior to signing on the dotted line, you are in a much stronger position to make positive changes as you go along. So here is a list of the pros and cons of investing in a franchise…
1. Proven business concept
A franchise should have an established brand name and corporate image before deciding to expand the business concept into franchising. The franchisor should have tested and proven the business model works effectively before expanding it as a franchise operation. You should always check the business model has been successfully proven, by talking to existing franchisees. In this way you know the “hard work” of starting a new business has been completed. It is your job as the franchisee to help the franchise network grow successfully.
2. Reduced Risk
Following from the above, franchising sets out to attract franchisees by eliminating much of the risk associated with starting a new business from scratch. It does this mainly through the franchisor putting the concept to the test of the marketplace and remedying any faults with the system prior to expansion. With the franchisor keeping a watchful eye on business pitfalls that might emerge for franchisees, risk is again reduced. The possibility of failure comes, as the saying goes, with the territory!
3. Combined Resources
The combined strength of a franchise network can have many advantages that a single start-up business can not avail of. The main advantage of the combined network is in the opportunity for franchisees to avail of bulk buying at competitive rates from large suppliers.
A well-established franchise can enjoy the same buying power as big companies can. But you should also double check with a franchise investment that you are either to buy your supplies from head office only or you are allowed to buy from different suppliers depending on time, money and other restrictions. Nevertheless, the extensive buying power of a large franchise network can be advantageous for the growth of a new unit.
4. Finance
It is much easier for a potential franchisee to attain the relevant financial funding from a reputable financial institution than it is for an individual setting up a business from scratch. Why? Banks and other financial organizations “love” the idea of franchising and know only too well the minimal risk associated with lending to a franchisee. That is, the franchisee, albeit he/she may be inexperienced within the business system, has the support and backing of a well-known franchise business model, existing franchisees and of course the franchisor. This makes lending money to a prospective franchisee more attractive than lending to a new business start up.
5. Exclusive Territory
Franchising seeks to eliminate the danger of competition within a specified franchisee territory, by granting each new franchisee the right to operate in a territory exclusive to him or her. However you must be aware that although you can avail of an exclusive territory to conduct your business endeavours, a similar franchise operation to yours can set up shop beside you and there is nothing you can do but rise to the challenge of competition.
As a potential franchisee you should research your preferred area for business and analyze any competition you may have and then ensure the franchisor can grant you exclusivity. This will help your chances of success and potential profitability.
6. Independence
As a franchisee although you may not have full control of the franchise network operations, such as marketing campaigns, business accounts etc, for many franchisees the idea of having someone else guide and help the business grow is a good thing. The overall success and failure of the business will depend on you, and that is a sure mark of being your own person– you should accept that you alone are not the sole author of the business. Franchisees generally are aware of this prior to investing in a franchise and this contributes to the success of the business.
1. Inflexibility
Franchising brings with it a certain amount of inflexibility, that is, the franchise operation and network is governed by a set of pre-described rules and the operations manual set out by a franchisor. This inevitably results in the continual need for uniformity amongst all franchisees involved within the franchise network.
These restrictions can be seen as a point of cohesion and strength. However, if the industry market is unstable, the franchise in general may be slow to react to fast industry changes. This can be frustrating on the part of the franchisee who may want to react to industry changes as they come along, while they must wait from an initiative set down by the franchisor.
The wisest franchisor will overcome this problem by a free flow of regular communication between franchise and franchisees. Regular seminars, conferences and talks will enable difficulties to be raised and solutions sought within a matter of hours. This creates cohesion and a sense of community participation for all involved and the risk of inflexibility decreased dramatically.
2. Not quite your own boss
The tight restrictions franchisors place on controlling the franchise network might appear too constricting for potential franchisees. But it is a necessary pre-requisite for franchisors to keep a tight rein on the franchise network of franchisees in order for the business to grow and expand successfully. The ideal situation is for the franchisor to maintain control over standards while at the same time allowing franchisees sufficient freedom to enjoy running the operation as their own business.
It is impossible for a franchisee not to put their own imprint on the business and in most cases a franchisor is happy to let the personality of the franchisee shine through the business operation. The best franchisors will encourage franchisees to contribute to the development of the whole operation.
3. Regular Royalty Fees
As part of the franchise agreement between you and a franchisor, you will be expected to pay a regular royalty fee at a specified time, how much and how frequently will be a clause stated within the franchise agreement. For some franchisees the idea of paying a regular fee to the franchisor can be a sore point.
However tough this may seem, continuing fees are an important issue to understand before accepting and signing the franchise agreement. You may run your franchise business successfully without the support of the franchisor in the long term.
Nevertheless, the franchisor can urge a franchisee to increase turnover in order to boost the amount paid in fees, which is calculated as a percentage of sales. The franchisee may prefer to increase profitability which does not mean an increase in turnover. This is undoubtedly a potential weakness in a franchise system and one to look out for.
4. The Franchisor- An “Unknown Element”
A potential franchisee does not have long to get to know the business personality of the franchisor in question and if you encounter a difficult relationship with the franchisor after investing, you will have a very troublesome business relationship to contend with.
Therefore, one of the risks associated with investing in a franchise operation is the “unknown element- that is the franchisor- involved. As a franchisee it is up to you to research the franchisor and the business by talking to existing franchisees and asking relevant business questions.
As you can see here from the outline of pros and cons of a franchise investment, the advantages of investing in a proven business model clearly out-weigh the disadvantages, and with careful consideration of the cons a potential franchisee can eliminate the cons quite quickly and focus on the positives of the business operation.
Aine Meade is a Website Editor for Franchise Direct, a leading Internet franchise advertising portal. Aine creates high quality franchise information for its international websites in the U.S., and Europe. Aine has a BA (First) in English and History; MA in Literature & Publishing; Diploma in Media Journalism and a Diploma in Marketing.
If we can replicate the way a winner runs his brain, then we can replicate the way they think and behave, and hence the results they produce. If others can walk on stage and deliver a speech with confidence, so can you.
If others are able to constantly direct their emotions to feel motivated and confident, so can you! If others display highly creative skills, you can do so too.
Remember, they are able to do so because they are running effective mental programs. With the same neurology, you just have to unlock their secrets and run your brain in exactly the same way.
Think about this for a while.
Are you afraid of public speaking? Some people get terrified just by looking at a large audience in front of them. Their hands turn cold, their legs shake uncontrollably, their face turns white and they start to stutter when they open their mouths.
This is called a phobia and all of us have phobias for one thing or another. Yet at the same time, why is it that another person, seeing exactly the same audience can feel comfortable, relaxed, confident – even eager to speak.
Such seemingly natural orators speak to an entire auditorium as easily as if there was only one person in front of them. They may even be able to entertain the audience, make people loosen up and laugh, and they feel great about being up there too.
Again, what is it that makes the confident speaker different from the fearful one? They have the same mental resources available to them.
The difference lies in how they represent the experience of the audience and the stage in their brains. You see, the thought and behavioral patterns they run through their neuro-connections are completely different.
The first person’s brain is wired up in such a way that seeing the audience immediately triggers off a ‘fear’ program that shuts their entire body down. This is expressed physically in sweaty palms and brow, butterflies in the stomach.
Quite the opposite occurs when the confident speaker sees the audience. His neural connections fires off a ‘relaxed and confidence’ pattern that allows him to perform at his best!
Unfortunately, most people have never learned how to direct and re-program the limiting patterns they run. They are not in charge of their brains. Instead, their brains take charge of them.
They let their brains go on ‘auto pilot’, running mediocre programs that keep limiting their performance.
As a result, they will always feel that there are things they can never do, simply because they believe that it is not within their control. Or ability.
You too can do what you thought was impossible before, like exercising consistently until you get to your ideal weight. Or give a powerful speech and inspire a two-thousand strong audience.
Once you learn how to change a program in your brain, in fact any program, it will ultimately change how your body reacts. And you can accomplish anything you set your mind (or brain) to.
If you are considering a franchise as your next career move, you probably already understand a number of the benefits to being a part of a franchise system. However, as each franchisor will offer different levels of assistance, it can be confusing to someone trying to evaluate a potential franchise purchase.
Since the value of a franchise is that the system has been developed to have replicable results, you will want any system you evaluate to score high in those areas that are important to the success of your unit.
Location – Location – Location
If your franchise is going to be site-dependent, the franchisor should, at a minimum, provide guidelines for selection of a site and the general terms of a lease agreement applicable to this type of location. Some franchisors will provide company personnel who will help you search for and select a site while some even work with national real estate brokers to find the best properties. If your franchisor provides help in site selection and lease negotiation, you are working with a good company.
Build-out Assistance
A typical franchise will provide each franchisee with instructions for the design and lay-out of the store along with details of where to purchase the components. As group buying power an important benefit of being part of a franchise company, you should expect to pay less for these components as a franchisee than if you purchased them as a sole proprietor.
At the high end of franchisor build-out assistance are those companies with design groups who help the franchise design the store, sometimes with such high-tech devices as CAD (computer-aided design) systems. Also, some franchisors will even hire a construction team to do the build-out and then deliver the components right to the new business.
Initial Training
The majority of franchised businesses do not require a new franchisee to have previous industry experience, primarily because they believe they can train a person with good business acuity to run the business successfully. A good training program is therefore essential. Most franchise companies will bring the franchisee to corporate headquarters for classroom training and some will allow time for hands-on training at a nearby franchise unit or corporate store.
This initial training should cover all aspects of the operations of the business, including book-keeping, record-keeping, operations, recruiting and retaining employees, and finding customers. The franchisee should receive an operations manual and get answers to any remaining questions she may have so that she feels confident she will be able to get her business up and running.
Some franchisors will provide corporate or field personnel to work side-by-side with the franchisee during grand opening and during the first week of operations, ensuring the franchisee has mastered the training and achieves a comfort level with the business. Franchisors that are willing to train a franchisee’s manager along with a franchisee are providing a value-added service.
On-going Training and Assistance
A good franchise business will continue to improve and evolve with time and the addition of new units and on-going training is often a necessity. Similarly, a good franchisor will offer continuing educational opportunities to franchisees as well as providing on-going assistance as needed. Many franchisors provide a help-line for issues that come up in the field and some will make regular visits to the franchisee’s location. A company that provides conferences or other opportunities for a franchisee to connect with fellow owners has the best interests of their franchisees in mind as these opportunities allow for creative problem-solving, the sharing of best practices and can reenergize the business focus.
Marketing Expertise
Your franchisor should provide you with a complete marketing plan for your new business that covers grand opening through at least the first 3-6 months. Since the franchisor has every reason to want you to succeed, a savvy franchisor will do much more. Many will provide you with the actual marketing materials, professionally produced. These may include pieces such as posters, banners, direct mail postcards, newspaper ads, and maybe TV and radio spots, all of which can be customized for your location.
Permits, Compliances and Other Legal Issues
Depending on the type of business, you may also need assistance in dealing with local governmental agencies for various permits. If your franchise involves food or beverage, there are numerous health-code compliance issues you will need to handle. Your franchisor should provide help in these areas so that your opening is not held up waiting for permits to come through.
There are several ways to find out how the franchisor handles these support items. The first, of course, is that you will want to ask questions about each as part of your investigation into the business. The second step is to talk to existing franchisees about the support they received and how well prepared they were to open and run the business.
Be sure to ask these franchisees if they felt there was anything missing from the training and support they received and if there is anything they wish had been more complete or done differently. If the company you are investigating scores well with these franchisees, you can be confident you will be happy with the support they will provide to you.
Kimberley Ellis is the President of Bison.com, a leading online resource for franchise and business opportunities. She has been quoted as an industry expert in USA Today, Wall Street Journal and a variety of local and regional publications regarding trends in business and franchising. Kim combines her entrepreneurial spirit with a diverse background in marketing and operation to help others succeed in franchising.