Franchising Information
In a sense, franchising is a business model whose primary purpose is risk minimization. Every study ever done on the success rate of new (non-franchise) business start-ups concludes the same thing. Starting up a new business is very risky. Most studies show that over 90% fail within three years. The primary reason that the failure rate is so high is because the owners have to go through the learning curve of operating that specific type business.
Unfortunately, the market place is not very tolerant of the inexperienced person trying to learn how to operate a new business. If you can't compete in the market place, you get eaten by the sharks very quickly, you go bust, you lose money, your credit, your home, your reputation and sometimes even your family. Failing in business can be a horrible experience. Unfortunately this happens to thousands of poor souls every year, and it is so unnecessary.
Unless you have considerable experience in the specific type business that you are considering going into, it is very probable that you will fail. Business format franchising is as close as you are going to come in today’s market place to a guarantee of success. All the studies done have found that franchise new business start-ups rarely fail and when they do it is typically because the franchisee did not stick to the franchisers systems.
In all human endeavour there is involved a learning process. This learning process requires going through a series of trial and error encounters wherein knowledge is gained by trying and failing, trying and failing again and again and eventually trying and succeeding. This process is generally called the learning curve. In the context of franchising, the franchiser has already gone through the learning curve and has learned the secrets of success for the specific business. In business format franchising all that has been learned by going through the curve is transferred to the franchisee. This is fundamentally why you buy a franchise, to minimize risk and give yourself the best possible chance to succeed. Another reason why it is prudent to buy a franchise is that a franchise investment can be thoroughly researched before any significant expenditure is made.
With a new business start-up (non-franchise) you are always operating in the dark. No matter how much research you do it is very difficult to get a handle on so many aspects of the new business. With a franchise the franchisor has a wealth of information about the business from how to prepare a pro forma to the best personality traits for the business. You can also get great information from the existing franchisees. With a good systematic approach you can get answers to nearly all the really key questions. Such as, Do you feel that you were properly trained, how long did it take before you reached break even, what is your annual return on investment, how do you feel about the day to day duties of the business and if you had it to do over, would you do it again? You can in a very real sense try the business on before you buy to make sure it is a good fit for you.
Franchise Advisory Service
Another very important reason to consider buying a franchise is intertwined into its basic nature. Franchising inherently leads to rapid growth, because the franchisees provide the expansion capital. There are few restraints to growth in franchising. As a franchise system expands into hundreds of units many positive things begin to happen. The name begins to become well known because people see it everywhere. Most people associate size with success. The bigger the franchise the better it must be. The large number of units enables the franchise to advertise heavily, which tends to increase sales. A synergy begins to be created in which success begets success.
What is stopping you? Are you like many other people and simply don’t know where to start? Are you asking yourself the following questions? I want to start a business, but I don’t know what kind? There are thousands of franchises available, which is the right one for me? I don’t have any experience in running my own business; can I get the training?
- Can I get support after I get my business started? How much investment will I need?
- Can I finance any of my investment?
- Do I need to operate the business or can I hire someone to run it for me?
- Can I open more that one unit?
The questions are endless, and that is where Franchise Connections come in. We can help you ask the right questions and make the right choices. Our role is to help you analyze your lifestyle, financial and business requirements, and then help you focus in a few opportunities that best fit them.
Let’s take a look at some of the questions that we’ll be asking!
- Are you money motivated? Do you feel that you’re at a deadend where you are now?
Being money motivated is important. This characteristic will tend to hold you in good stead when you have to work long and hard in the first two years of owning a franchise.
- Do you fit in the corporate environment?
Do you like working for someone? Have you ever been called a misfit, a maverick, or a malcontent? If you are very comfortable working for someone else, then owning your own franchise might not be for you.
- Do you really enjoy working hard, even if there is no immediate reward?
How self reliant are you? Do you wait for others to take the initiative? Do you need the approval of others and considerable support before you make a decision, start a task, or move in a new direction?
- Are you a risk taker? Are you willing to place your time, energy, and money into a venture that has the possibility of failing?
Any way you cut it, you have to take a chance. There are failures in franchising. Less than 10% but the risk is still there. Can you handle it?
- How self reliant are you? Do you wait for others to take the initiative? Do you need the approval of others and considerable support before you make a decision, start a task, or move in a new direction?
You do have to be relatively self-reliant because you do have to manage the business day to day. However, one of the most significant benefits of owning a franchise is the support given by the franchisor. The phrase "You are in the business for yourself but not by yourself" is very true.
- Do you take real pleasure in being the boss, or having the authority and responsibility for the success or failure of a new venture?
If you are the kind of person who enjoys being in charge, then having the authority and responsibility for the success of the venture will not be a problem.
- Are you a positive person?
Being a negative person is a luxury you can ill afford in business. Negative thinking begets failure. You simply have to be a positive person in order to succeed in business.
- Do you have good people skills? Can you interact with people effectively? Do you like people?
In nearly all franchises, good people skills are critical. If you don't have good people skills, you must be willing to develop them.
- Can you stick to the franchisor's system, or do you have to do everything your way?
The primary reason that franchising is so successful is because the learning curve is transferred from the franchisor to the franchisee. The franchisor has developed a successful system. If you are going to be a franchisee, you must be willing to stick to the system. You have to do things the franchisor's way. Not your way.
- Do you like to teach? Do you enjoy training people in new tasks?
The nature of franchising necessitates almost constant training for employees. It certainly makes it a great deal easier if you like to teach.
- Can you handle multitasking? Can you cope with the multiple demands of operating a business?
Operating a business requires wearing many hats. You have to be willing to do everything from mopping the floors to dealing with irate customers.
- Are you willing to accept the help of others?
You simply must be willing to accept the help offered by the franchisor. It is valuable and it will help you succeed. Also, help is often forth-coming from employees. It's prudent to accept all help offered.
- Do you have the determination to get what you want and go for it 100 % ?
Achieving success does require a certain degree of inner strength. If you feel strong enough to make your franchise successful, then go for it.
- What is your educational background? What is your work experience? What do you really know how to do well?
This seems obvious but it deserves some thought. The closer your experience is to the type of business you are considering, the better are your chances of succeeding.
- What do you absolutely love doing? What are your hobbies?
A fundamental of human nature is that we always do well that which we love. If the franchise involves doing what you love, then you are way ahead. Or, which is more realistic, if you can fall in love with the franchise concept, that's the ideal.
- Do you really like people?
Most franchises, certainly all retail franchises involve a great amount of people contact. Even if you really like people, it can sometimes be overwhelming. If you are not a "people person," lean towards the franchise concepts with less people contact.
- Are you introverted or extroverted?
Some franchises involve you to be outgoing, others not. Don't put yourself into a situation where you must do things totally against your nature.
- Are you the hands on or hands off type?
To be successful, most franchises require a hands on approach. However, there are some which are suitable for absentee ownership or a hands-off approach.
- Are you willing to work long hours, six to seven days a week?
Most new franchises demand a great deal of energy and time in the beginning, especially anything food related. Look very closely at what is going to be demanded of you personally and make sure you are willing to give it.
- Are you a risk taker?
Are you willing to bet on a new unproven concept or would you be more comfortable with a well-established, proven, franchise concept?
- Do you like to sell?
Many franchises demand a lot of selling by the owner.
- Does the idea of really becoming part of a community appeal to you?
A very effective way to insure success is to become a giver to the community where your franchise is located. The more you can give, the better are your chances of succeeding.
- If a particular type of franchise looks attractive, can you see yourself spending your days for the next 5-10 years in that specific type of business?
Imagine yourself in the franchise business, doing whatever the business demands for years on end. Is it a pretty picture?
