Tag: Kim Ellis

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Franchise

The Franchise Timeline: Guidelines for how long it should take to open a new franchise

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Susan, a bright, energetic and make believe person, has decided to become a business owner by buying a franchise. She understands that there are many steps to the process and asks me how long it will take before she will be able to open the doors to her business. Figuring she wouldn’t be satisfied if I told her that it could take anywhere from several months to a year or longer, more or less, I came up with the following timeline:
Step 1: Finding the right franchise
Susan could be out shopping and see a for sale sign in the window of a storefront franchise. If she likes the business, can meet the seller’s price, is approved by the franchisor, and gets in on a franchisee training program right away, Susan could be running her new business in a short period of time.
However, a more likely scenario is that she will spend weeks or even months doing research on a variety of franchise businesses before selecting one for purchase. Once she finds a business to investigate, Susan will have to go through a Discovery Day to meet with the franchisor in person, learn more about the business, have financing arranged, and be approved as a franchisee.
There are a lot of variables here but much depends on a person’s motivation –
how anxious they are to start a new career. Another variable would be how the search is conducted. If Susan uses a franchise broker to help her narrow down her search, the process usually takes about six weeks. If she decides to do research all on her own, it may take months or even as long year before she is confident she has found the right business.

Average research time: Six weeks to six months

Step 2: Finding your location
The actual territory of your business will be part of your contractual agreement with the franchisor and within that territory you will probably need a physical location. The location could be in a mall or strip-mall, a warehouse in an industrial park, or a stand-alone building. Some exceptions would be home-based businesses that you could run from a home office or cart-based franchises that you would take to events like parades, carnivals, fairs, etc.
Most franchisors offer at least some help with site selection to find the most advantageous location for your business. Some even help with the lease negotiations. Specifics for build-out and furnishings are usually covered in your agreement and franchisors use their bulk purchasing power to get you reduced prices these items.
Depending on how difficult it is to find a location and the amount of work needed to get your location ready for business, this process could be lengthy. I’d tell Susan to be both prepared and patient.

Average time for location search and build-out: Six to eighteen months

Step 3: Financing
I spoke briefly about financing but that was assuming that my friend Susan had cash in the bank ready to spend on a franchise business. The cost for opening a business covers three areas: the initial fee paid to the franchisor, the cost of preparing the business for opening, and finally the cost of running the business for that period of time until it is profitable. That includes paying your bills and your employees and also the money you need to live on.
Fortunately a prospective franchisee doesn’t need to have all that money in her pocket. Some of it can be borrowed from a bank, usually using equity in a home. Another option is taking the money from your retirement savings plan.
Often the franchisor will help you find a franchising option by connecting you with some companies that do these types of loans. However, the sooner you can get financing, the sooner you will move ahead with your new business so don’t put this item off until the last minute.

Average time to secure financing: One to three months

Step 4: Training
Once Susan has selected her business, she will be excited and anxious to start training. Training programs can vary quite a bit from company to company. Some franchisors will do training by email and phone for a period of weeks and then bring in the new franchisees for some classroom work and hands-on training at headquarters. Other businesses need only to provide several days of classroom training.
Since Susan’s training should cover all aspects of running her new business, from operations to marketing to customer service, a training program of several weeks or more is typical. Many franchisors will offer a number of continuing training opportunities as well, and because I believe the more you know the better, I’d be sure to encourage Susan to take advantage of all the training available.
The good news for Susan, who is anxious to get started, is that a majority of the best franchisors have new franchisee training classes scheduled at least monthly so her wait to start training won’t be long. The franchisor will be just as anxious to get the new business open as the franchisee, so they will have the training process thoroughly mapped out.
The length of time for training will depend of the type of business. If the franchise provides a service, training to learn the service may require a more lengthy training time than would be required for a simple retail outlet. In a business with a more involved retail operation, a new franchisee may need to work in an existing location for a period of time to thoroughly learn the business.

Average time for franchisee training: Two weeks to two months

Step 5: Other Issues
Depending on the type of franchise you buy, you may also need to deal with zoning or permit issues, hiring and training employees, and stocking your store. If these will apply to your business, add more time to your estimate.
I’d caution my friend Susan to use these figures as estimates only. Each situation will be unique. The most important thing I’d tell her is to be sure she has adequate financing to cover whatever delays may occur because being under-financed is considered the number one reason most franchisees fail.

KimberlyEllisPhoto.jpgKim 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.

Categories
Franchise

Why Franchising Attracts Women Entrepreneurs

busy-woman.jpgHave you ever wondered what it would take to leave the corporate world behind and own your own business? Are you tired of being the go-to girl, a small fish in a big sea, earning money for someone else? Is it time to take charge of your future and really be in control of your destiny?
If you answered “Yes” to any of these questions, then you’ve thought about business ownership – but something has stopped you from moving forward. Was it lack of experience? Couldn’t think of a unique concept that would compete with established brands? Fear of the unknown? If so, you are not alone.
That’s why so many people have turned to franchising – and a record number of those franchise owners have been women. When you buy a franchise, you have help setting up and running your business. The concept and brand name are established and recognizable by the public. And there are experts to “hold your hand” and answer any questions along the way.
In the United States the number of women-owned businesses grew at twice the national rate for all privately held companies from the period of 1997 to 2002, according to census data. One reason may be that business ownership is a way for women to crack through that proverbial glass ceiling. Another reason is that it can give a woman more flexibility, something greatly desired by those with a home and children to manage.
For many women, owning a franchise can be the easiest way to achieve their dream of business ownership. No one claims that every franchisee is successful; however your comfort level will be greatly increased if you follow a tried-and-true system instead of building something from scratch.
Here are some of the ways a franchisor may help their franchisees:
• Build-out/Site Selection. From the look and layout of your store to the location to the signage, a franchisor knows what works to draw customers. Most franchisors will offer guidance in these areas and some even have employees who will work one-on-one with a franchisee to accomplish each of these tasks.
• Marketing. Most franchisors have a marketing strategy that takes into account the demographics of the franchisee’s territory and the best way to get business. Many also require the franchisee to contribute to a national marketing fund, which buys national advertising. A national TV ad, for example, will increase brand awareness and the buying power of many contributors will allow greater penetration into markets.
• Proprietary Software. If your business will rely on technology, many franchisors have specifically designed software to keep track of customer lists, inventory, accounting, or whatever is needed to keep the business running smoothly.
• Employees. When a business has many open locations, they have significant data to draw upon. This can be of great help when you need to hire, manage and retain employees. A franchisor can tell you what type of person to hire, where to advertise for employees and may even provide employee manuals and other resources.
• Buying Power. A major advantage of being a franchisee over being on your own is having the buying power of a large business. Whether your product consists of bread or batteries, or your service is house painting or dry cleaning, you will benefit from the greatly reduced prices you pay for supplies and inventory because of the quantity purchased by the franchisor.
• Training. Say you want to own a window tinting business but you don’t know a Cavalier from a Camry. No problem. A franchisor will train you in most everything you need to know to run your business – including how to hire the people who do know their way around cars. You will still need to have innate business skills and a great work ethic to succeed in your business but most specific parts of the business can be learned.
This is the safety net a franchise provides: a tried and proven concept with operations, marking, distribution, accounting, technical support, brand, etc. all in place, tested, retested and ready for a sharp, hard working entrepreneur to join the team. Growing a business through franchising obviously works. U.S. Department of Labor statistics show that franchising accounts for approximately one trillion dollars a year in sales and is increasing at a rate of about 8% per year. For a woman who is preparing to run her own business for the first time, it can be the best of both worlds. A franchise provides the help and guidance of a big company along with the control and flexibility of a small business.
If you’ve been thinking about owning your own business, buying a franchise may provide you with the security you need to make the commitment. A good franchisor will provide you with training, support and continuing help – after all, they don’t succeed until you do. With over 1,600 franchise concepts in the US today, there’s never been a better time or a better place to follow your dream of business ownership and you will find lots of company – women populate all areas and all sectors of franchising.
KimberlyEllisPhoto.jpgKim 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.

Categories
Franchise

Why You Should Keep Mum to Mom

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For years you’ve listened to your mom’s sage advice: “Turn off the lights,” and “Save your money” Most of the time that advice was pretty good and many times you even followed it. Now don’t tell your mom I said so, but there’s one time when your mother’s advice may not help you and that’s when you are about to invest in a franchise opportunity.
Look, I still think mom is right up there with baseball and apple pie. It’s just that when it comes to making a life-changing decision, those “trusted advisors” in your life may not be the best people to help you make the choice. Whether it’s your Uncle Ed, your best friend, or Dear Old Mom, your biggest fan can quickly turn into Ebenezer Scrooge when you tell them you want to buy a business.
Let’s take Uncle Ed. He’s been around the block a few times and knows a number of people. As a matter of fact, he knows a guy who knows another guy who had a brother-in-law who once owned a business and it didn’t do well. Now that business may have been selling pet rocks a decade after the fad went out of style and the owner may have spent more time in hip boots fly fishing than he did in his store selling painted stones. But in Uncle Ed’s mind, only one fact is relevant: “The guy didn’t do well.” Therefore, he is certain, you won’t either.
Is this the person you want to make a career decision for you? He may think he wants what’s best for you but instead he’s picturing you as having already failed. If you need advice about purchasing a franchise, make sure it is from someone who understands franchising.
I’m not suggesting you keep your franchise research a big, dark secret. But I would suggest that you carefully consider who you listen to. If you don’t, you will find yourself swamped with well-meaning but ill-considered advice.
“But I tell my best friend everything,” I can hear you say. “She knows me better than I know myself.”
If you are considering business ownership as the next step in your career, you’ve already done a good deal of soul-searching and self-evaluation. There’s always the element of risk in a new venture but, because you are considering business ownership through franchising, you’ve already taken a big step towards limiting that risk.
Franchising offers you the ability to start a new business without starting it from scratch. Your franchisor will provide you with training, an operations manual, marketing assistance, on-going support – and more. They know what works in their business and truly want you to be successful.
Of course if there’s one person who truly has your best interests at heart, it’s your mother, right? No one can disagree with that. However, let’s take a look at this picture through your mother’s eyes.
First, she’s coming from a different generation. In her day, people picked a career, got a job, and then worked in that job until they retired. I’m generalizing here but for a good part of the last century, having a job meant security. Keeping a child safe and secure was mom’s number one goal. Therefore, she believes you should have a job. She wants you to be happy but she’d rather have you safe and any change in routine is seen as fraught with potential danger.
Now, there is one person you must include in your decision making and that’s your spouse. Any decision you make should be with the full support of your partner. Many franchisors require the spouse be a part of all phone conversations and face-to-face meetings because they know that no decision will be made unless the spouse is onboard. Whether or not your husband or wife will be involved in the business, it is of critical importance to a new franchisee that the significant other agrees with the purchase and will provide emotional support.
As for the others? Our experience shows that those trusted advisors can be well-meaning, but sometimes they are not equipped to help you evaluate such a significant decision. Generally, family and friends want to support us and want to see us do well, but they also recognize their job as protecting us from dangerous decisions.
In the end, buying a franchise is not about your uncle, your best friend or your mom. It’s about you and your future. You need to make the decision whether owning a franchise is the right move. If you need an advisor, make sure you choose someone who understands franchising and will help you make a decision based on fact, not emotions.
Mom was right about so many things. Sitting up straight, eating vegetables and getting enough rest are still part of my daily routine. But mom and your usual trusted advisors aren’t usually experts in franchising. So, when considering business ownership, you may want to keep mum to mom. When your franchise purchase is a fait accompli, invite your trusted advisers to do what they do best: bring the balloons, buy the champagne and help you celebrate your new business!
KimberlyEllisPhoto.jpgKim 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.

Categories
Franchise

What Do You Need to Pass a Franchisor’s Test?

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Buying a franchise is a lot like marriage. Two parties enter into a relationship with the expectation of mutual benefit, long-term support and common goals. When entering into marriage, both people spend a great deal of time learning about each other and making sure they are a good match before making the commitment. The same is true for franchising. Both the franchisor and the franchisee gather information about each other and evaluate whether there is a good match. Although it may not be immediately evident, a franchise company is under no obligation to award a franchise to just anyone who can afford the franchise fee. In many cases a franchisor has as much or more at risk when a franchisee fails.
A franchisee that fails loses money, but a franchisor must report every failed franchise unit in a document called a UFOC (Uniform Franchise Offering Circular). This document is provided to each and every person interested in buying the franchise. A company that shows significant franchise unit failures will have a more difficult time attracting new franchisees. A failed store can also tarnish the brand.
Like any good business, a franchise company will want to populate their system with great people. Since franchising is based on a strong, consistent brand, a franchisor looks for franchisees who will present the brand in the most positive light. In the same manner, they only want franchisees that are able and willing to learn the system and work within its specific parameters.
In many ways, this is actually an advantage for women entrepreneurs. Historically, women are seen as better listeners and more likely to follow the set of rules provided by a franchisor. Experience in a particular industry is not as important as general business knowledge. Marketing and sales experience are often required and these are also areas where women tend to be strong and have experienced success.
When researching a franchise company, you will find that they may have as many questions about you as you do about the company. A franchisor is putting their time, money and reputation on the line, so most have developed a “profile” of a successful franchisee which they use to determine if you are “right” for their business.
While this may sound exclusionary, franchisors have a very good reason to learn what works and to stick with it. Successful franchise companies want their franchisees to excel. They have refined their systems around a set of standards they have learned franchisees need to thrive.
Yes, it’s true. You can’t buy a franchise as easily as you can buy a condo or a pair of Manolo Blahnik shoes. You must first pass the franchisor’s test. These are the most common items a franchisor looks for in a potential franchisee:
• Money may not buy happiness but you will need it to buy a franchise. Most franchisors have a minimum net worth and liquid capital requirement for their franchisees. While this may seem obvious, there are other demands on cash availability beyond the initial costs of the franchise – such as the length of time it will take your business to start making money and the living expenses you will have during that time. There are financing options available that may help you qualify if you are short of capital, however no good franchisor will want to see you start out your business heavily in debt.
• Personality is paramount to passing the “test.” Few businesses run themselves. They require hard work to get them up and running. There are some personality characteristics that seem to be common in all successful franchisees. Other characteristics are specific to individual businesses.
o Are you willing to follow a system or are you the type who wants to do everything your own way?
o Do you enjoy working with people?
o Can you lead a team of employees?
o Are you focused and decisive?
o Do you enjoy solving problems?
o Can you set and meet personal goals?
These are some of the questions a franchisor may have for you and your answers will determine not only if you can qualify for a particular franchise but also if you will be a successful franchisee.
• If the shoe fits, you’re a match. Fit is another area franchisors look for. Each company has its own culture and franchisors realize that a franchisee must be comfortable with the corporate staff as well as the other franchisees – and vise-versa.
• Does experience matter? Franchising is one area of business where your specific experience is less important than other factors. That’s because of the excellent training provided by most franchise companies. In truth, many franchisors prefer franchisees without industry experience because it is easier to train someone in a franchisor’s system than it is to “un-train” a franchisee who has ideas that may conflict with the way a franchise system works. Again, it is the overall business experience you’ve attained through life that will make you a “star” in a franchisor’s eyes. One attribute that is required by most franchisors is that you have business acumen and understand how the parts of a business contribute to the whole.
The goal for every franchisor is successful franchisees. As much as you may want to qualify for a franchise opportunity that interests you, remember that the franchisor has the background and experience to know what type of person makes a good franchisee in their system.
Those strappy sandals you want may look great but it they don’t fit, you’ll be unhappy in the long run. The same is true for buying a franchise. It really has to be just right for you to provide you with the opportunity for long-term success, so passing a franchisor’s test is just another way to be sure you’ve chosen the right business.
KimberlyEllisPhoto.jpgKim 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.