Understanding Franchising – Part Five

How Do I Avoid Mistakes with a Franchise?

In the right circumstances, franchising reduces the risk of getting into business. Nevertheless, your process of investigation should be extensive and methodical. Most initial buyers will say, I don’t even know what questions to ask.  If this is true for you, allow me to point the way for you.

Start now, and study up:

Learn about franchising. Read books, attend seminars, etc, and become familiar with terminology used in franchising. I can refer you to appropriate resource for Franchise Terminology  Click Here

Examine your motives for going into a franchise business. Be realistic. Even the best franchises can test your patience during that first year of operation. If you aren’t particularly good at seeing things through, then franchise ownership will offer you coaching to help you stay on track.

Understanding Franchising – Part Four

What Are The Advantages and Disadvantages of Franchising?

Franchise Advantages:

  • There is an already successful model to view and evaluate, and your rights are clearly delineated in a contract of a franchise. 
  • Instead of needing to think through thousands of details on your own, your franchise provides support to you. During the start-up of your business, they may provide assistance with site selection, supply of equipment, assistance from experienced staff during the launch period, and selection and purchase of stock. Better franchisors are committed to providing you with ongoing support as their income is dependent upon your success.
  • The franchise brand name can add an aura of success and drawing power to your business.
  • The franchisor can provide training in both general management and skills specific to your franchise as well as significant administration and management functions. Advertising and/or marketing support to build your clientele is provided.
  • A detailed Operations Manual provides you with resources to support you in just about every eventuality your business could experience.
  • A designated territory is often provided to avoid overlap within the Franchise system.

Understanding Franchising – Part Three

What Can I Expect to Pay for a Franchise?

Most franchisors charge an initial fee (often referred to as the franchise fee) to cover the upfront costs of setting up the franchisee in business. These companies have often spent a great deal of money to establish, prove, document and then market their Franchise System. The initial fee is simply a means of their recovering some of these expenses.
However, ongoing support of the new franchisees requires additional funding. There will be certain out-of-pocket expenses to be taken by the new owner for real estate leases, build-out, equipment, etc. There will be capital costs to market the concept and pay employees, as well as for ongoing fees (royalties) usually taken monthly by the franchisor. These are either a percentage of the franchise owner’s gross income or a flat monthly fee.

Understanding Franchising – Part Two

Qualifications For A Franchise?

Most franchise companies have set forth a number of criteria against which you will be qualified, such as:

Financials Franchisors don’t want you to be overextended on your purchase, thereby limiting your ability to succeed, so most franchises have minimum liquidity and net worth requirements for investors.

Your skills and experience They have learned from experience with other owners what levels are required to succeed, and expect you to meet or exceed these.
Your personality This should be suited to the role you would play as an owner.

Understanding Franchising – Part One

The Power of Franchising

We’d be the first to admit that franchising isn’t for everyone.

Not only do I prepare potential franchise owners so that they can make highly informed decisions about purchasing a franchise, I tell them if I don’t think they are well-suited to franchising, starting with directing them to a resource like mine so that they better understand what franchising is.

One important point in franchising

If you are going to understand only one thing about franchising, it should be this: 

Who invented franchising?

As a franchise coaching firm, we are often asked, who invented the Franchise.  One of the most successful business models is the franchise, but it didn’t originate with McDonald’s. Sir Harold Evans describes the remarkable story of a beauty salon that allowed hundreds of women to own their own businesses.

Looking in the mirror and deciding if your basic makeup is right for franchising

At Your Franchise Coach, we speak to hundreds of people every day that are considering the purchase of a franchise. And one of the questions we hear most often is do I have the right stuff?
There is no easy or quick answer to that question until we get to know you a little better. While we like to think that every person has his or her own individual merits in this world of ours, and could succeed at franchising, given the right match. But, in truth, there are a few things that we have learned over the years that generally make someone better franchise material than others.
So what makes someone good “franchise material?

What is a franchise?

Franchising is a powerful economic force, according to a study conducted for the International Franchise Association’s Educational Foundation by Price Waterhouse Coopers, which found that a franchise opens every 8 minutes in the United States, franchising employs over 21 million people, there are 3,500 franchise concepts in 75 industries (there is life after food). Franchising accounts for 1.53 trillion in sales and 50% of all retail sales and that 1 out of 12 retail business is a franchise?

Yet, we’d be the first to admit that a franchise isn’t for everyone.

This is where Your Franchise Coach begins and ends. Not only do we prepare potential franchise owners so that they can make highly informed decisions about purchasing a franchise, we tell them if we don’t think they are well-suited to franchising, starting with directing them to a resource like this one, so that they better understand what franchising is about.