Looking to Purchase a Franchise?
So you’ve dreamed about operating your own business for years, but the start-up costs and logistics are intimidating. The statistics are daunting: a third of new small businesses fail within the first two years of operation. Perhaps an established franchise-based venture is the answer to your entrepreneurial dreams.
For the individual with an entrepreneurial spirit, sufficient resources and the right sensibilities, a franchise-based business can provide an exciting and rewarding career opportunity. But franchising is not for everyone. The FranBiz Group will provide you with the good counsel to make the right decision.
Five Important Questions to Ask Yourself
Answer the following five questions honestly BEFORE you consider purchasing a franchise-based business.Working within the structure of a franchise system requires the Franchisee to have a large measure of faith in the company in which they’ve invested—the Franchisor. Franchising is inherently a bit of a dichotomy. In other words, franchisors seek out entrepreneurial individuals, yet they insist upon strict adherence to a pre-determined business plan that they have formulated, without deviation.
Ask yourself—are you willing to place your fate and money in the hands of the franchisor you select? Are you willing to follow the franchisor’s proprietary operating manual without deviating from its recommendations for a period of at least one year? If you do not answer “yes” to both these questions, you should select a different franchisor, or become an independent operator in a similar industry. FranBiz can provide you with options for a better fit.
The Right Fit
Franchisors recognize that it is virtually impossible to predetermine who might be the ideal franchisee for their system. Some of the best franchisees may ultimately question every detail in the Franchisor’s Operating Manual, but initially, they must be willing to follow the manual to a “T”.
Some of the worst franchisees are those who question everything from Day One. These are individuals who often attempt to take short cuts, refusing to follow proven measures and procedures established by the company. Novices who believe they know how to do things better, faster, or less expensively are the same people who may end up in financial ruin and blame the franchisor for non-support.
The flipside of that maverick approach is the franchisee who questions nothing, takes the company business model and simply just duplicates it. And they may refuse to change as the system changes—“ I like the way we used to do things…the old way was better.” Of course, we all know that a system that does not evolve with the time and adapt to a changing marketplace becomes obsolete. Individuals who never offer suggestions on how to improve a franchise system are often left wondering why their sales volume has flattened.
The consultants at The FranBiz Group are experts at putting qualified candidates on the right path to finding the business model that suits them best.
The Road to Franchise Success
Franchising is like getting the keys to a new car, full of gas, with a working GPS system. But if the driver insists on taking his own route, he may run out of gas, find himself lost, and damaging the car on a road under construction.
• If you are the kind of an individual who absolutely will not read an Operations Manual or never asks for directions or help when lost, then it may be fair to say that Franchising is not for you…
• If you like to work alone—if you’re not a collaborator by nature—franchising may not be for you. Franchising is an extended family. If you refuse to listen to the members of that family, you will wind up outside its protection.
Have you ever noticed how some people will take counsel from perfect strangers, but won’t listen to those family members who will care for them the most? FranBiz will provide you with an honest, objective evaluation of your skill sets and characteristics, determining if a franchise-based business is right for you.
The Franchise Key
It’s worthless to buy a turn-key system if you refuse to turn the key. Taking an active part in franchise network meetings, conventions, advisory boards and franchise steering committees are all part of the system’s strength.
Remember, there is no such thing as a perfect franchise system. Any practical franchisor recognizes that their system is the best they have built to date, but it is not perfect. The Franchisee Network feeds the Franchisor valuable ideas from the field through those aforementioned groups.
The History of Franchising
To help you better understand the strength of franchising; consider the history and the scope of the franchise model of business.
When did Franchising begin? The word Franchise comes from a French word meaning privilege or freedom. A sovereign lord would grant the right to individuals to hold markets or fairs. Hence, they had a “franchised right” to conduct business.
Around 1840, in Germany, many brewers granted franchises to certain taverns giving them an exclusive right to sell their ale. In 1851, the Singer Sewing machine company began issuing written franchise contracts to sell their sewing machines. This is the first recorded written example of a franchised brand.
Here are some examples of the larger franchise-oriented corporations and the number of units in their systems in the U.S.:
Subway 16,000
McDonald's 12,000
Wendy’s 6,000
Dominos 8,000
The UPS Stores 5,500
Holiday Inn 3,600
Of the estimated 3,500 franchise-based companies operating worldwide, less than 15% have more than 150 units. Only 3% have more than 300 units. By sharp contrast, the world’s leading franchisor, McDonald’s, operates more than 23,000 units.
The principals of The FranBiz Group have personally been responsible for building, training and supporting over 525 franchised locations!
2. Do I really like the business I am considering purchasing?
Do you like the industry you’re considering—its people, and its products? Will you be proud to tell your friends and associates what your new venture is?
3. Can I physically, financially and emotionally afford this business?
Don’t get into a business that requires heavy lifting if you have a bad back. Don’t overextend yourself financially to the point where every last nickel you have is in the business. Plan on your new venture taking longer to break even than you expected. If you don’t like dealing with people, don’t go into retail. If your spouse doesn’t want you in this business, don’t do it.
4. Am I willing to follow this franchisor’s guidelines?
Do I believe this franchisor’s Owner’s Manual will provide me the roadmap for a successful journey? At first glance, it may seem easy to say “yes”, but aspects of franchising that are vital –yet often overlooked—are the guidelines for conducting outside marketing, especially before your franchise’s launch.
5. Am I satisfied with the location and/or territory that the franchisor has helped me identify?
The Number One reason new franchisees cite as to why their franchise didn’t work out as planned is “poor location”. Too often they pick a location because it is close to home or in a nice part of town.
Never hesitate to ask questions before purchasing a franchise. If you are not satisfied with a franchisor’s answers, keep looking.
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