chain of outlets, perhaps they already have a chain of outlets but want more. But what are the specific benefits of franchising your business that tempt so. crucially, do you have the skills necessary to become a successful franchisor? In this to open and operate a business under the franchise trademark and for training in how to operate the But if you want to expand more quickly and get. Let us give you insight on the process of franchising your business through . can get the required financial support, the more a business can be franchised. . Step 2: Think about How You Would Like Your Business to Grow. For you to have .
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Franchise attorney Harold Kestenbaum has written a fascinating book entitled “ So You Want to Franchise Your Business” that can lead you in the right direction. Follow these eight steps to successfully franchise your business. Step 1: Evaluate suit franchising. The business also needs to be something you can systematise and replicate, and it Do you want an owner/operator for each unit or master. en Davis always hated getting his hair cut. The former insurance-startup executive wanted to start a business he could grow into a national brand, so he decided.
The better the profit model then generally the easier it is to start up, run and maintain a successful business. New innovative products and services with protected technology and new growing markets make ideal franchise businesses.
This is because demand exceeds supply, which enables price levels to be maintained, and the protected technology limits the effect of competition.
Businesses with strong brand names and reputations also tend to have stronger financial models. This is because customers are prepared to pay a higher price, and will more often say yes, to receive a trusted product or service. Mature products and services tend to have less strong financial models. This is because time has enabled competition to develop - alternative products, services, technologies and suppliers.
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Maybe routes to market are no longer appropriate for franchise business operators. Would you take a local door-to-door book or CD franchise given the dominance of the huge online distribution businesses? Not likely.
If there is a better and more cost effective route to market than through a franchise business it is likely that the financial and profit model of the franchise in question is under pressure.
Seek out franchises with modern technology, innovative protected products and services, a strong brand and reputation, with growing markets, where the route to market favours the franchising business model.
These opportunities will almost certainly be the ones which offer the strongest and best profitability.
A University for Life Skills
Look for high integrity propositions and franchisors High integrity is essential for two crucial reasons: You will keep your peace of mind, and sleep at night. The world is full of miserable millionaires - people who have exploited others to make their money - don't be seduced by this false dream.
Always behaving and deciding with high integrity will keep you safe, well, and probably make you wealthier too. You will delight your customers and good word will spread, which is vital for local service businesses, which nearly all franchise businesses are.
Local businesses live or die by their reputations. Behaving with high integrity will automatically ensure that your reputation shines and grows. Many well established successful franchisees never need to advertise or look for their next customers - their customers find them. If you download a franchise that lacks integrity, then with all the best will in the world, you will be pushing water uphill.
Look for and download a franchise which has high integrity at the centre of its products, services and business ethos, and you are half way to running a high integrity franchise business - all that remains is for you to ensure that your own input and activity are high integrity too.
Understand the financials You don't need to be Gordon Gekko, but you do need to understand the essential things: What is the level of investment and what do you get for it - is it good value? Or is it all smoke and mirrors? How long will it take you to recover your investment - in other words what is the payback period - how quickly will the franchise realistically and reliably get into profit?
This is a crucial indicator, and one which you must understand and be assured that it is acceptable and achievable before you download any franchise. What are the running costs of the franchise? Get a clear idea of what these costs are. Be able to see and understand them over a year, broken down month to month. What working capital will you need? What borrowing or loan arrangements are required, and can you afford the repayments, given the working capital requirements of the new business, and the rate of expected business and profit growth?
What alternative borrowing or loan arrangements are available - look around - negotiate hard. If you do not ask you will not get. No back manager will offer you their best possible rate until or unless they feel they have to.
Have an alternative - play one lender against the other. This applies also to when you come to download the franchise itself - sometimes there is room for negotiation.
Again, if you don't ask you won't get. downloading a franchise can become like downloading a house - if you get your heart too set on one single option then you have exactly that - just one option; and no room to negotiate. If you find two options you immediately increase your power in the discussions, and you will feel more liberated in your decision-making too. Understanding the relative financials is an important aspect of comparing franchise opportunities.
Work at using the key financial figures and indicators and you will quickly become accustomed to making these judgements, which in turn will make you stronger in your discussions and negotiating before downloading your franchise. Understand the meaning of contracts The business contracts that are signed by the franchisees and franchisors represent the agreement and terms of trading between the two parties.
What is written in black and white, and signed by both parties, is the agreement you have made. Nothing else matters - so take time to understand this part of the process, and question anything that you don't like. It is no use in a subsequent dispute or misunderstanding to refer to a discussion or verbal commitment.
If it ain't in writing and signed, then it ain't any use to you. If you understand the contract you will achieve far greater control over your legal advisors whose fees can escalate considerably when clients fail to understand what's going on , and also greater control over the other side and their advisors, and you will generally be able to negotiate a much more advantageous outcome.
You don't need to become a lawyer - just understand what the contract means - you'll be surprised how easy it is if you take a bit of time to learn. downloading a franchise The following information about selecting and downloading a franchise business is provided by Business Link, which is gratefully acknowledged. While the information is essentially for the UK franchising market the principles are generic, sensible, and transferable to anywhere.
The material is subject to Crown copyright. The right franchise can give you a head start. Typically, you trade under the brand name of the company offering you the franchise, giving you help and support.
Successful franchises have a much lower failure rate than completely new businesses. But it isn't all plain sailing. Some franchises are better than others. And some people find that running a franchise just isn't for them. This guide will help you decide whether franchising is for you. It shows how you can find the right franchise, and highlights the key issues you need to consider.
What is franchising? The term franchising can describe some very different business arrangements. It is important to understand exactly what you're being offered. A true business format franchise occurs when the owner of a business the franchisor grants a licence to another person or business the franchisee to use its business idea - often in a specific geographical area. The franchisee sells the franchisor's product or services, trades under the franchisor's trade mark or trade name and benefits from the franchisor's help and support.
In return, the franchisee usually pays an initial fee to the franchisor and then a percentage royalty on sales, although some franchising arrangements do not include a royalty payment. The franchisee owns the outlet it runs.
Many well-known businesses offer franchises of this kind, including famous brands in sectors such as fast food, drain clearance, print and copying, cleaning chemicals, pet food deliveries, and automotive repairs. Other types of sales Different types of sales relationships are also sometimes referred to as franchises. You have more freedom over how you run the business.
There are usually no extra restrictions on how you run your business. A word about multi-level marketing Some businesses offer 'franchises' that are really multi-level marketing. It is fair to call many of these businesses 'pyramid schemes'.
Self-employed distributors sell goods on a manufacturer's behalf. You get commission on any sales you make, and also on sales made by other agents you recruit.
However many of these multi-level marketing organizations do not represent the proper spirit of franchising: many do not give good support, many are based on poor-integrity business models, and some multi-level marketing schemes are downright dishonest and illegal.
So be warned. Advantages and disadvantages of franchising downloading a franchise can be a quick way to set up your own business without starting from scratch.
But there are also a number of drawbacks.
You can check how successful other franchises are before committing yourself. You benefit from any advertising or promotion by the owner of the franchise - the "franchisor". The franchisor won't sell any other franchises in the same region, though there will be competition from other businesses.
Banks are sometimes more likely to lend money to a franchise with a good reputation.
Franchise Your Business Summary
As well as the initial costs of downloading the franchise, you pay continuing royalties and you may have to agree to download products from the franchisor. You might not be able to make changes to suit your local market. Are you suited to franchising? As with any new business venture, you need to carefully consider whether you have got the right skills and attitude to run a successful franchise.
Analysing your own temperament can also help you decide which type of franchise would be right for you. A franchise gives you a business blueprint - but it won't give you customers. Do you have the necessary stamina? Think how you react to pressure. If so, would you be happy with the restrictions imposed by a franchise arrangement? You might be more comfortable with a franchise than starting a new business from scratch.
Or would you prefer a business that involves physical labour? Are you happy working on your own? Or would you be good at recruiting, training and managing employees?
Do you like dealing with members of the public? Or would you prefer a franchise where you sell to business customers? Are you weak in particular business skills such as finance? Can you find a franchise that offers the support you need in those areas? Research possible franchises You can find out about possible franchise opportunities from a range of sources. As well as offering guidance and seminars on franchising, it provides: details of members who may be offering new franchises details of members who may be offering existing franchises for resale Franchises are advertised and written about in various national newspapers and in trade publications such as Dalton's Weekly and Franchise World.
Websites such as Whichfranchise and Franinfo can be a useful source of information on franchises.
So You Want to Franchise Your Business – Book
You can find other listings using a search engine and employing search terms such as franchise opportunity or franchise directory.
Attending a franchise exhibition can also be a good way of finding out what's on offer. Details of some major exhibitions are available from FranInfo. Do tread carefully. Advertised franchise opportunities - particularly multi-level marketing schemes - can be untried, dishonest or even illegal. Assess the franchise opportunity carefully and check whether the company offering the franchise is a member of the British Franchise Association, or your own country's equivalent. Ask questions and look for evidence of their claims.
Ask the franchisor for a full list of past and present franchisees, not just the two most successful ones. Take advantage of other sources of information and advice. Ask your bank - many have franchising specialists. Disadvantages of downloading a franchise downloading a franchise means entering into a formal agreement with your franchisor. Franchise agreements dictate how you run the business, so there may be little room for creativity. There are usually restrictions on where you operate, the products you sell and the suppliers you use.
Bad performances by other franchisees may affect your franchise's reputation. downloading a franchise means ongoing sharing of profit with the franchisor. Franchisors do not have to renew an agreement at the end of the franchise term. Franchising is seen by many as a simple way to go into business for the first time. But franchising is no guarantee of success and the same principles of good management - such as informed decision-making, hard work, time management, having enough money and serving your customers well - still apply.
Be cautious when downloading into a franchise if you have to develop the market and the brand in your designated area. Make sure your investment generates healthy returns and a capital gain when you sell.
Also considerdownloading a franchise The following information about selecting and downloading a franchise business is provided by Business Link, which is gratefully acknowledged. Finding a good emotional and philosophical match with your chosen franchising company is almost as important as choosing the right sort of business. While they are similar, and have many overlapping features, they have distinct differences that should be acknowledged before an entrepreneur signs on the dotted line to proceed with either.
What alternative borrowing or loan arrangements are available - look around - negotiate hard. So what is a franchise exactly? Give them freedoms, but keep those freedoms circumscribed. This is where a franchisor outlines financial performance information. Ask the franchisor for a full list of past and present franchisees, not just the two most successful ones.