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.
Tag: opportunity
If you are like most women, you chose a career path at the tender age of 18 or 19 and have dutifully followed that path for many years. But let’s say you’ve grown tired of your career, or worse yet, never liked it to begin with. What are your choices?
-Stay where you are and make the best of it
-Change careers and start all over at the bottom
-Take advantage of the training offered by a franchisor and become your own boss in any industry you choose!
Let’s imagine a woman has been in public relations for ten or fifteen years but has a burning desire to spin pizzas instead of situations. What is she to do? As everyone knows, it isn’t easy for someone 40 or 50 to quit a career and start over, especially if she wants to try an entirely different field. She would have to give up a steady income and face months or years of reinventing herself. Perhaps she’d take a job at a pizza parlor and hope to learn enough to open her own shop someday. An alternative solution may be that she could buy a pizza franchise and take advantage of the training and support offered by the franchisor. Provided she has the financing, that would-be pizza chef could be managing a team of pizza spinners in just a few months.
Many or even most women will change careers at least several times their lifetime, whether because of changes in the economy or workforce, or because their careers don’t provide them with enough money/control/opportunities/ etc.
While it was once common for someone to keep the same job from college to retirement, this had changed dramatically, particularly in the past 10 or 20 years, and this trend is expected to continue. Studies suggest that teens today may have between six and 12 careers in their lifetime.
Besides – many people really enjoy the challenge of a taking on a new career. Corporate executives replace their suits with sweats and open fitness centers. Doctors become fried chicken moguls and teachers get remade as pet groomers.
How do they make the transition? Many times through the power of franchising and one of the bonuses you’ll discover about franchising is that they can train you to excel in a job you’ve never done before!
No Experience Necessary
If you are a woman who is ready for a career change via franchising, the training a provided is one of the most important benefits a franchise system will offer you. An education from the top online schools or graduate schools pales in comparison. The benefit of training goes both ways. It provides you with the tools you need to learn a new career and be successful in your new business. But it is also important to the franchise company. The franchise system depends on the integrity and stability of their brand from store to store and franchisee training is essential to this process.
You’ll find that a good franchise system will take pride in their training programs because, through the payment of royalties, your success becomes their success.
And guess what? Most franchises don’t require you to have experience in their field. In fact, many don’t even want a franchisee with previous industry experience. Because the systems of a franchise are structured for maximum success, previous industry experience often gets in the way when training a new franchisee.
Branding
Branding is another area where a franchise can offer you a shortcut. From California to Washington DC, you can buy a Häagen-Dazs ® Mayan chocolate cone and the quality and taste of the product will be exactly the same. If you own a Häagen-Dazs Shop, the public will know what you sell and that awareness will often make the difference between the success and failure of your business. Imagine how long it would take you to create a branded awareness of your new business if you started from scratch, not to mention the cost of hiring firms to create and advertise your brand.
Just as important to the quality of the product is the service the public expects from a franchised concept. You never know what to expect from the staff at “Jane’s Ice Cream Parlor” on the corner but you can trust that the people serving you at a Häagen-Dazs Shop will be friendly, clean and efficient. Why? Because the franchisor has set standards for employees and provided training and guidance in hiring practices. Everything that effects the perception of their brand is accounted for in the franchisor training.
Franchisors Care About Your Success
Your number one reason for choosing a franchise business over creating your own concept is that studies show your chances for success are exponentially greater. The franchisor has done many things before franchising the business that you, as a franchisee, you won’t need to, including establishing and building the brand, testing a variety of marketing concepts, finding the best way to deliver a quality service or product, and researching the best value in suppliers.
Most franchisors offer help to their franchisees in a combination of important areas, which may include: site assistance, initial training, operations systems, field support, grand opening assistance, national marketing programs, on-going training, and full-time encouragement for you to succeed. They become your business coaches and cheerleaders as you establish your new career.
The greatest merit of a franchise system is that you should be able to walk right into your new business after training and expect to have the tools needed to make it successful. It’s up to you, of course, to put in the hard work that will make that success a reality.
If you are thinking about a career change, don’t overlook the advantages of letting someone else do much of the work for you. A great franchise will offer you the training and tools you need to not only start a new career but to own your own business in any field you choose! Consider it a “shortcut to success.”
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.
The lure of franchise ownership can be a heady experience. You imagine the thrill of being your own boss, creating wealth for yourself instead of someone else. But you don’t want to enter the search process unprepared, susceptible to mistakes.
You have so many questions: Will you be happy as a franchisee? Can you make the money you need to provide for yourself and your future? Where do you even start, with thousands of franchise opportunities available?
Before you even begin looking at franchises, you need to do an introspective self-evaluation of your own strengths and challenges. Sit down, get out paper and pen, and as objectively as possible answer these questions:
SKILLS / STRENGTHS
• What part of your current and past jobs have you liked doing the most?
• List your skills and evaluate how well you perform each.
• Describe the work environment that most appeals to you.
• Are you an animal lover? Auto buff? Artistic? What skills/hobbies do you have that may be applicable to a franchise business?
• Are you status conscious? Does it matter to you what the product or service of the franchise is or does the business potential matter more?
CHALLENGES
• What part of your current and past jobs have you liked doing the least?
• List your weakness, those things you’d not want to do or would want to hire someone to do in a business.
MANAGEMENT SKILLS
• Do you have experience managing employees? Did you enjoy it?
• Are you comfortable with recruiting employees?
• Do you have the experience and skill needed to create a work environment that will allow you to retain employees?
FINANCIAL CONSIDERATIONS• How much capital do you have to invest?
• Can you afford to do without a regular income during the start up phase of your new business?
• What are your financial goals?
• How do you see your lifestyle changing as a result of meeting your financial goals?
• How do you feel about taking the risk of becoming self-employed?
ARE YOU A TEAM PLAYER?
• Franchising is all about following someone else’s system. Can you picture yourself in this role, executing a system you didn’t create?
Once you have answered these questions, you’ll begin to see a clearer picture of what talents you can bring to a franchise business and what you expect to receive in return. The next step is to start looking at opportunities and evaluating them based on your answers. It may take some effort to find the right franchise so don’t compromise.
Franchise opportunities come in many shapes and sizes and you never need to settle for one that is just not a great fit. There are businesses you can run yourself from your home and others that call for multiple unit locations in upscale malls with numerous employees.
Choosing the franchise opportunity that best matches your needs, interests and style is your greatest assurance of happiness and success.
Kim 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.
If you’ve ever dreamed of owning your own business, you’re not alone. The desire for the autonomy and financial security that being your own boss can provide has never been more prevalent than it is today. There are many reasons for this but a main one would have to be that as big business gets bigger, the value of the individual employee is diminished and people are fed up with being disposable. Owning a business is a great way for a woman to take charge of her future.
One way to become a business owner is through franchising and the franchise industry is at an all-time high. There are more franchised businesses than you can possibly imagine. A recent survey found almost 500 concepts in fast food alone, a category that represents only 20% of U.S. franchises. The IFA Educational Foundation’s Economic Impact of Franchised Businesses study indicates there were three quarters of a million franchised businesses in 2001.*
There are other ways to become a business owner, include buying a business opportunity and creating a business from the ground up. There are definite advantages and some disadvantages to owing a franchise business over these other business ownership options and the franchise model is not right for everyone.
To see if franchising could be right for you, compare your previous business experience, your motivations and your current situation to the following examples.
Franchise Ownership
Let’s imagine that you are in your early 40s and have worked for a half a dozen large companies over the last 20 years. You’ve been recently laid off but even before the layoff, you realized you desperately wanted to change careers and find something that would allow you to use a larger skill-set and provide a greater income. Your company has given you a cash settlement and you are keen to take charge of your life, become your own boss and try something different. You want a good income and are willing to put in whatever hours necessary to jump start the new career but your overall goal is to eventually work reasonable hours and have more time for yourself and your family.
If your history is similar, you are probably an excellent candidate for franchise ownership. This path will allow you to benefit from a proven system of operations and a training program that will quickly get you up and running. As you have no previous business ownership experience, the ongoing support you will receive from a franchisor will be vital to your success. Many franchise opportunities offer a turnkey package that will include almost everything you need to start your business. In addition, most franchisors require no previous experience in their industry so you can be open to a variety of types of businesses and won’t need to stick to the one industry you know.
Another advantage to franchising is that franchisees can take advantage of lower cost materials due to group buying power. They also learn from each other and usually form a peer support system. Because you won’t be occupied with every minute detail of owning a business, you will be able to concentrate on growing your business.
Franchisors learn from their franchisees and use this information to continually improve their systems. Data from other franchisees can be used to help you predict your break even timeframe and franchisors are required to provide you with a UFOC (Uniform Franchise Offering Circular), which will help you learn about the company, the officers, the current franchisees, and any litigation against the company.
Franchising is a business model that works very well for those who have previously been in middle or upper management – particularly women as they are historically more likely to comply with a franchisor’s rules. Women, many franchisors report, are also quicker to see the value of using a proven system and less likely to waste time trying to fix something that’s not broken.
Compliance with a franchisor’s rules can also been seen as a disadvantage to franchise ownership. A franchise lets you be in charge as long as you follow and adhere to all of the elements of the franchise system. This is necessary so that the franchisor can offer consistency across the brand – and let’s face it, they’ve done the research and tested the procedures so their way is usually the right way. This is also a benefit to the consumer who can expect comparable quality products or services no matter which franchisee he patronizes, anywhere across the country or around the world.
Another perceived disadvantage is that a franchisee must pay royalties and sometimes a marketing fee to the franchisor. Royalty payments are compensation for everything the franchisor provides, including access to the brand, the operating system and related items. The franchisor uses the marketing fee to provide national advertising to build the brand and drive market penetration at a greater level than a franchisee could do on her own. Also, national marketing funds enable franchisees to benefit from professionally produced marketing materials and realize efficiencies from commingled funds.
If your are comfortable learning from others who have experienced success and would rather follow a proven trail than bushwhack your way through the jungle, buying a franchise could help you achieve your personal and financial dreams. However, if you’re the type of woman who likes to run with scissors and would never stop to ask directions, there may be better options for you. Read on!
Buying a Business Opportunity
As another example, let say that a varied work history has given you some great skills which you wish to put to use running your own business. You are not concerned about the type of business you buy but want to have freedom to run it your way. You would be okay with a certain degree of risk but also recognize the advantages of an established system of operations.
A business opportunity is a business you buy outright and have the freedom to run any way you choose. The benefit of a business opportunity is that they generally provide you with a successful business model and possibly some training and marketing assistance. The initial investment is usually lower than for a franchise and there are no ongoing royalty payments.
A downside to a business opportunity is that the seller isn’t as invested in your success or failure as is a franchisor because they make their money up front. Therefore, you won’t have extensive ongoing training, assistance, a national marketing program, research and development, etc. The risk factor is probably greater than for owning a franchise but could be less than starting your own business.
Starting Your Own Business
In this third scenario let’s assume that you have a steady, predictable income, perhaps from a working spouse or other source. You think of yourself as a truly entrepreneurial woman and you are brimming with ideas for new products or services and love to “tinker” with things until they are just as you want them. You are strongly attracted to the idea of being your own boss and don’t like to answer to others. You’ve previously been a business owner and have enjoyed the experience. You have the drive to follow through on your plans and have a background in a variety of disciplines, including sales, marketing, accounting and management, so you are not looking for outside support. In addition, you have plenty of money to spend on researching and developing your product/service so a predictable timeframe for break even isn’t a concern.
If you are like this type of person, one who likes blazing her own trails, franchise ownership is not for you. Instead you will be more comfortable setting up your own business using your own ideas. This is the most risky way to become your own boss because you will not have the proven operations system, nationwide brand and marketing, and the ongoing support of a franchise company. You may also have more difficulty obtaining business loans and the time from inception to when you start turning a profit will be hard to predict. On the plus side, you will owe no royalties and can run you business just as you please.
Historically this is the model least likely to succeed on average so it is recommended only for truly exceptional individuals who have the desire and stamina to start their own business based on their own unique idea or approach.
The chart below will help you compare the advantages and disadvantages of these three types of business ownership opportunities. For a majority of people, franchising has proven to be a viable way to become a business owner. For the most part it offers the lowest risks and the highest level of support. Because a franchisor doesn’t succeed until the franchisees do, you’ll find a team of dedicated professionals willing and able to help you every step of the way, from site selection to employee hiring to grand opening. They will keep in touch with you from the very beginning to years down the road and have web sites, toll free numbers and dedicated staff to make sure all your questions are answered quickly.
But it takes the right sort of person to be a happy and successful franchisee. Before you become too involved in the process of finding a business to buy, carefully consider which type of opportunity will be right for you. It can make all the difference between the success and failure of your new venture.
Business Ownership Comparisons
* IFA Educational Foundation-FRANdata study released August 2006
Kim 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.
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.
Kim 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.