In my business, I spend a good portion of my time continuing to develop relationships with the top franchise companies in the industry. It is really important for me to know exactly the type of franchise owner they are looking for. I don’t want to waste their time or my client’s by introducing the wrong person. It has to be the right match for the right reasons. The time I spend with the franchise companies and the up to date information I get from being a member of the IFA is very important to me.

The industries to watch this year are:

Health Services – The franchise industry realizes that there is a big need for services in this segment. After all, lots of doctors are having a hard time making money these days and new franchise opportunities have been designed to fill this need.

Pets – People will always spend money on their pets and related services. This is an industry that continues to grow every year. Last year pet owners spent over $47 billion. Franchisors have created lots of different franchise companies and have gained a share of this sum.

Fitness - This industry is growing, too. With our ever growing knowledge of health and fitness, people are trying harder to stay fit.  There is something for everyone in our business, and new concepts are popping up all the time.

Senior Care - This is the industry that has the fastest growing population – which isn’t a big surprise to anyone. There are lots of great companies that offer help in many ways on all levels to the growing senior population.

Spa Services – The franchise industry has done a great job of identifying another need recognizing the desire for services and filling it. They have created affordable services for our stressed out society based on research which supports the need to reduce our stress in order to prolong healthy, useful lives.

Tutoring – It won’t come as a big surprise that our public school systems are really struggling with lots of cutbacks and still the competition to get into college is getting harder every year. This is an industry that continues to grow and thrive.

I am always asked, “What do you think is the hottest trend?” My answer is always, “It depends!” Why do I answer that way? Because it doesn’t matter what’s hot and what’s not if the business isn’t the right fit for YOU.

What trend do you like the most?

“Attitude is a choice. We create our own world by the way we choose to see it. For the next five years your mind can focus on fear, worry, problems, negativity or despair. Or it can focus on confidence, opportunity, solutions, optimism and success. You decide. “

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. I can refer you to appropriate resources – see below.
• Examine your motives for going into 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.
• You will need the support of your family and should discuss your plans with them. In fact, most states require both husband and wife sign a franchise agreement so encourage your spouse to be part of your investigation process.  Remember, the biggest fear is the fear of the unknown.  The more your partner is engaged in the process, the more support you will receive.
• Study the concept — I will help you know what to examine, what to learn, what will work for your skills.
• Study the FDD — the Franchisor must provide you with a disclosure document that delineates all of the pertinent facts relative to their opportunity. If they do not offer you one before asking you to sign a contract, they are breaking the law. When you read it – read it as if you have been in business for two years. You will be amazed what a difference that makes.

Above all – turn your assumptions into questions so you get to the facts. You don’t want to say NO to a business based on what you think, rather than on what you know.

Suggested Readings:
Rick Dad, Poor Dad, Robert Klyosaki
The Go-Giver, Bob Burg
From Employee to Entrepreneur, Marvin Storm
The E-Myth Revisited, Michael Gerber
Having It All, John Assaraf
Street Smart Franchising, Joe Mathews & Thomas Scott

Advantages:

• There is an already successful model to view and evaluate, and your rights are clearly delineated in a contract.
• 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’s 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.

Disadvantages:

• You will not be in a position to exercise 100% control over all aspects of your business. But why would you want this? You’re BUYING expertise and experience when you purchase a franchise, so 100% control would be counter-productive. You should understand this fundamental point from the beginning if you want to be successful.
• If a franchise in another town or country has problems that draw national attention, it could adversely affect your sales. (Do you remember the tainted food fiasco that injured Taco Bell’s reputation in 2006?) This is why FDD’s from the better franchise companies often have very strict rules – they are there for YOUR protection.
• If you’re not terribly good at taking directions from others, then perhaps franchising isn’t for you, because you must be able to follow the system that your franchise company has developed. A franchisor has the right to terminate your contract if you do not remain in compliance with your contract with them. You will never find sushi at McDonald’s.
• An average contract with a franchise is for 10 years — but not a lifetime. As you near the end of your contract, you can sell your franchise, or you can choose to renew, if the franchise invites you. So first of all, you have the right to sell your franchise at any time if you choose.
• Every franchise receives ongoing monthly royalty payments from its franchisees for the ongoing support they provide usually in the form of a flat fee or a percent of gross sales. Remember the franchisor’s engine runs on royalty income, hence if you are not successful, neither will they be.  It’s a win-win proposition.

One thing I always coach my clients on is this: don’t let a past experience rob you of your future dreams. It is human nature to go back automatically to a negative experience we had in the past because we are afraid history will repeat itself. Make sure your fear is REAL and not just a bad memory. (Fear is false evidence appearing real.)  I work hard to find a business where my clients can play where they work! If you love what you are doing, it won’t seem like work.

Do you know what you are passionate about?

Life is always going to bring us ups and downs, highs and lows, that is just called life. It is how you deal with it that makes the difference. If you are feeling down, make a gratitude list, you will amazed how that will help you. Call a friend or mentor and thank them for being there for you. You will find that if you start finding what is going right and quit trying to stare at what is going wrong – you will be amazed how that will help you.

Have a wonderful holiday and thanks for the opportunity to share my experience with you. Life is what you make it – why not make it the best life ever!

Your Franchise Coach, Phyllis

Most franchisors charge an initial fee (often referred to as the franchisee 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 franchisee requires additional funding. There will be certain out-of-pocket expenses required of the new owner for real estate leases, build-out, equipment, etc. There will be capital expenses 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.

The total initial investment for a particular franchise is estimated in that franchise company’s Franchise Disclosure Document (FDD) so that you can estimate ALL costs associated with starting up your new business.

It is very important to get started on your financing right away. If you have a relationship with your local banker you might pay him a visit to see what programs are available to you. But buyer beware.  They might tell you they can do an SBA loan for you, but please make sure that you ask if they have been doing them lately. Over the years, it has been my experience  that if they don’t have an SBA packager doing the loans, your chances may be limited and you can waste a lot of time.

I always help my clients in this area during the early stages of the process. Have you given a lot of thought about how much money you are willing to invest?

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/or 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.
• Your support system — This is your partner, wife, husband,  and family who should be there to back you emotionally.

Unfortunately, most potential buyers go about searching for a franchise in the same way they would when buying a refrigerator. They fall in love with the franchise product or service without really knowing whether or not it would be a good investment. There are many well-known brands out there that don’t allow you to make much money on your investment unless you own quite a few units or are considered “mature” and the real money has already been made. Quite simply, you have to know what you are doing.

The better route is to use a franchise consultant who can help you assess your skills, needs, wants, desires, goals, and match you to the franchise opportunities that would be right for you. I have thirty years of experience gained by helping many others like you do exactly that.

My service is free-of-charge and can save you from many mistakes and much frustration. Buying a franchise is a lot like buying a house and you should receive the same level of attention as you would from your real estate agent.

What Should I Look For?

A good Franchisor will have considerably reduced the inherent risks of setting up a new business in several possible ways:

• they will have proven that their business system works well, and can be reproduced consistently
• they will have tested their idea, by means of at least one (but preferably more) test market operations which they operated for a minimum of a year in a typical location
• they will have justified their royalty payments by providing a significant number of support services for their owners, thus freeing owners to concentrate on building their business

Will the franchise be risk-free? Of course not. There is a human factor (you, the franchisee) to consider, as well as many other factors, therefore no franchisor can promise success. Franchising has demonstrated time and time again its ability to reduce risk versus the option of starting a business without the benefit of a franchise system. The key is to believe whole-heartedly in your franchisor’s system and be willing to follow it, rather than insisting on reinventing the wheel yourself.