Considering Franchising? 10 Questions To Determine The Right Fit
𝙏𝙝𝙚 𝘼𝙢𝙚𝙧𝙞𝙘𝙖𝙣 𝘿𝙧𝙚𝙖𝙢–𝙊𝙬𝙣𝙞𝙣𝙜 𝙔𝙤𝙪𝙧 𝙊𝙬𝙣 𝘽𝙪𝙨𝙞𝙣𝙚𝙨𝙨
According to The UPS Stores’ Inside Small Business Survey (April 29-May 5, 2018) approximately two-thirds (66%) of Americans dream of opening a small business. The company conducted the research as part of their initiative to celebrate “Small Business Month” in order to capture Americans’ feelings about starting and shopping at small businesses. 2018 survey respondenets revewled that they would operate a small business as a home-based business (56%), followed by brick-and-mortar (30%) and then an e-commerce business (20%). It found 3 out of 4 Gen Xers dream of owning their own business compared to Baby Boomers and Millenenials and over half are eagere to open a business in the coming year.
Dr. Luke Pittaway, Ohio University College of Business Copeland Professor of Entrepreneurship commented that “It should come as no surprise that Gen Xers (born 1965-1984) are the generation that feel the most optimistic and most willing to branch out and start their own small business,” said Dr. Pittaway. “This portion of the workforce is most likely well established in their career, financially equipped and starting to think about how they’ll spend the final stages of their career. In many cases, even when Gen Xers and Boomers reach retirement age, instead of grabbing their golf clubs or boarding a cruise ship, they’ll be looking for their next professional act. More and more we’re seeing that later career stages and retirement is the time professionals open a small business, and for many it’s the first time.”
𝘽𝙪𝙨𝙞𝙣𝙚𝙨𝙨 𝙊𝙬𝙣𝙚𝙧𝙨𝙝𝙞𝙥 𝙈𝙤𝙩𝙞𝙫𝙖𝙩𝙤𝙧𝙨
For those working in corporate America and not yet nearing retirement age, there are a multitude of reasons they will leave their job or start a business while transitioning out.
▸Build an asset for future sale
▸Fair reward – work hard and make money for themselves rather than the company
▸Emotional fulfillment of building their own dream
▸Satisfaction and happiness in day-to-day activities
▸Develop an asset to pass on to family members
▸Create an opportunity to work with family
▸Remove threat of job loss
▸Replace lost income stream
It’s not always easy to come up with a great business idea. Even if you were to envisage an excellent business concept, it can take a long time to get it off the ground and gain traction. Many aspiring entrepreneurs get discouraged and give up long before success is on the horizon.
Opportunely, franchising offers a way to invest in achieving dreams of business ownership by providing an established and proven concept. Franchisors award all the tools to run the business providing the system is followed and the effort is put forth.
𝙁𝙧𝙖𝙣𝙘𝙝𝙞𝙨𝙞𝙣𝙜 – 𝙍𝙞𝙜𝙝𝙩 𝙁𝙞𝙩 𝙁𝙤𝙧 𝙔𝙤𝙪?
Franchising is not a business or industry in itself but an efficient distribution business strategy by the Franchisor leveraging growth through its stakeholders’ resources of knowledge, experience, effort, purchasing power and finances. It’s more of a strategic partnership of those having similar goals & unified thinking among the brands participants.
But while some are willing and content to follow an operations playbook, franchising isn’t the right option for every would-be business owner. The Forbes Coaches Council suggests prospective franchisees ask themselves the following eight questions before investing. (Forbes Coaches Council is an invitation only, fee-based organization consisting of leading business and career coaches.)
𝟭. 𝘿𝙤 𝙔𝙤𝙪 𝙁𝙚𝙚𝙡 𝘼𝙡𝙞𝙜𝙣𝙚𝙙 𝙒𝙞𝙩𝙝 𝙏𝙝𝙚 𝙁𝙧𝙖𝙣𝙘𝙝𝙞𝙨𝙚’𝙨 𝘾𝙪𝙡𝙩𝙪𝙧𝙚?
You may not be aware that each franchisor has an ideal franchisee in mind and like any company they have their own “culture”.
Culture fit is critical to succeeding in any venture, and part of that is how success is measured. The franchiser has already identified and enacted the criteria it considers relevant, and there usually isn’t a lot of room to change that. Aligning with that methodology will be crucial to one’s ability to be good, profitable community partners and enjoy personal satisfaction in the business. – Lynita Mitchell-Blackwell, Leading Through Living Community
𝟮. 𝘼𝙧𝙚 𝙔𝙤𝙪 𝙋𝙧𝙚𝙥𝙖𝙧𝙚𝙙 𝙏𝙤 𝙋𝙪𝙩 𝙄𝙣 𝙏𝙝𝙚 𝙒𝙤𝙧𝙠 𝙏𝙤 𝙂𝙧𝙤𝙬 𝘼 𝘽𝙪𝙨𝙞𝙣𝙚𝙨𝙨?
A franchise location is a business that is all set-up (systems-accounting, payroll, POS, IT; operations, marketing, HR, etc.) for someone to run but the franchisee still needs to put in time and effort according to the model.
The allure of franchising is that you have a ready-made system for success. In reality, it’s still up to you to sell and make it work. New businesses are about cash flow and customers. Franchises help you shortcut the business framework, and you pay for that expertise with your franchise fees, but don’t be lulled into the sales pitch. You still have to grow it. – Jodie Charlop, Exceleration Partners
𝟯. 𝘼𝙢 𝙄 𝙊𝙠𝙖𝙮 𝙒𝙞𝙩𝙝 𝙇𝙞𝙢𝙞𝙩𝙚𝙙 𝙁𝙡𝙚𝙭𝙞𝙗𝙞𝙡𝙞𝙩𝙮 𝘼𝙣𝙙 𝘾𝙧𝙚𝙖𝙩𝙞𝙫𝙞𝙩𝙮?
You may be accustomed to looking at a situation and suggesting improvements. Problem-solving skills won’t be needed here if it modifies the model. One franchise area develop manager tells potential franchisees that he doesn’t want them to bring him any suggestions for changes for at least a year after award.
Opening a franchise means that there’s a formula by which the business operates. Branding, operating procedures and training for employees are often included, which provides you with an established baseline by which to run your business. On the other hand, you’re limited with regard to creativity, may have on-going franchise fees and often have less flexibility with regard to location and expansion. – India Gary-Martin, Leadership For Life
𝟰. 𝙒𝙝𝙖𝙩 𝘿𝙤𝙚𝙨 𝘼 𝙏𝙮𝙥𝙞𝙘𝙖𝙡 𝙁𝙧𝙖𝙣𝙘𝙝𝙞𝙨𝙚𝙚’𝙨 𝙇𝙞𝙛𝙚𝙨𝙩𝙮𝙡𝙚 𝙇𝙤𝙤𝙠 𝙇𝙞𝙠𝙚?
During validation there is the opportunity to speak with numerous franchisees by phone and visits are certainly arranged once the franchisor knows their brand is under serious consideration.
Visit with other franchise owners in the same chain you’re considering. Shadow them for a day. Find out what their typical day looks like, what challenges they face and what their family life consists of while managing their business. Does that lifestyle fit your outlook for the next three to five years? If not, look at a different business. – John Hittler, Evoking Genius
𝟱. 𝙒𝙝𝙖𝙩 𝙆𝙞𝙣𝙙 𝙊𝙛 𝘾𝙤𝙧𝙥𝙤𝙧𝙖𝙩𝙚 𝙎𝙪𝙥𝙥𝙤𝙧𝙩 𝘿𝙤 𝙁𝙧𝙖𝙣𝙘𝙝𝙞𝙨𝙚𝙚𝙨 𝙍𝙚𝙘𝙚𝙞𝙫𝙚?
Most franchisors have great support system in place with internal and external sources. Some have what can be considered support personnel that control rather than support. This is a question that can be asked of current franchisees during the validation phase.
The right franchise can lead to success. The wrong franchise can lead to suffering. Franchises can be helpful in providing resources, marketing and support. The biggest determining factor to consider is if the home office has the heart to help the franchisees succeed. – Ken Gosnell, CEO Experience
𝟲. 𝘾𝙖𝙣 𝙄 𝙎𝙩𝙖𝙮 𝙈𝙤𝙩𝙞𝙫𝙖𝙩𝙚𝙙 𝙀𝙭𝙚𝙘𝙪𝙩𝙞𝙣𝙜 𝙎𝙤𝙢𝙚𝙤𝙣𝙚 𝙀𝙡𝙨𝙚’𝙨 𝙄𝙙𝙚𝙖?
A franchisee needs to be able to follow a system already in place. Those wanting to modify the current protocol or create a new one will not be happy long term.
Not all entrepreneurs are good at running the play that someone else calls. In the franchise model, much of the ideation and strategy work has already been done, which is a huge benefit. Look back over your career to determine if you struggle to stay engaged and motivated when you’re executing someone else’s idea. The successful franchisee has to be okay coloring inside the lines to some degree. – Trellis Usher, T.R. Ellis Group LLC
𝟳. 𝙒𝙝𝙖𝙩 𝘼𝙢 𝙄 𝙒𝙞𝙡𝙡𝙞𝙣𝙜 𝙏𝙤 𝙂𝙞𝙫𝙚 𝙐𝙥 𝘼𝙨 𝘼𝙣 𝙀𝙣𝙩𝙧𝙚𝙥𝙧𝙚𝙣𝙚𝙪𝙧?
Most franchise experts would say that the franchisee in not the entrepreneur but rather the franchisor who developed the concept.
Franchises can be one of the most rewarding types of businesses to own. If you want to be the ultimate decision maker on all things related to your business, then a franchise is probably not your best choice. Strategize about what you’re willing to give up in exchange for what the franchise offers before you decide. – Lillian Gregory, The Institute for Human and Leadership Excellence
𝟴. 𝘿𝙤 𝙏𝙝𝙚 𝙁𝙧𝙖𝙣𝙘𝙝𝙞𝙨𝙚’𝙨 𝙂𝙪𝙞𝙙𝙚𝙡𝙞𝙣𝙚𝙨 𝙁𝙞𝙩 𝙒𝙞𝙩𝙝 𝙈𝙮 𝙑𝙞𝙨𝙞𝙤𝙣 𝙊𝙣 𝙃𝙤𝙬 𝙏𝙤 𝙍𝙪𝙣 𝘼 𝘽𝙪𝙨𝙞𝙣𝙚𝙨𝙨?
The beauty of franchising is that the system is already established (what employees to hire, how to train them, best marketing practices, products/services to sell, etc.) leaving the franchisee to jump in and run the business according to the training and manual. It is their way or the highway. If it has to be your way, then you will be frustrated.
Franchising, in general, comes with strings attached that include corporate guidelines on pretty much everything you’re allowed to do or not do. Ask yourself if you’re going to be able to run the business the way you think it should be run. If the answer is no, then franchising is probably not for you. – Kamyar Shah, World Consulting Group
A couple of additional questions to pose:
𝟵. 𝘾𝙖𝙣 𝙮𝙤𝙪 𝙚𝙣𝙫𝙞𝙨𝙞𝙤𝙣 𝙮𝙤𝙪𝙧𝙨𝙚𝙡𝙛 𝙚𝙣𝙟𝙤𝙮𝙞𝙣𝙜 𝙩𝙝𝙚 𝙙𝙖𝙮-𝙩𝙤-𝙙𝙖𝙮 𝙗𝙪𝙨𝙞𝙣𝙚𝙨𝙨?
Sometimes people buy a franchise because they think it will make them a lot of money but later experience that they do not enjoy the business. Typically franchise terms run from 5 – 15 years so use the adage, “know thyself” when considering your options. Determine your interests and types of businesses you might really enjoy.
𝟭𝟬. 𝘿𝙤 𝙮𝙤𝙪 𝙝𝙖𝙫𝙚 𝙖 𝙝𝙞𝙨𝙩𝙤𝙧𝙮 𝙤𝙛 𝙨𝙪𝙘𝙘𝙚𝙨𝙨 𝙞𝙣 𝙙𝙚𝙖𝙡𝙞𝙣𝙜 𝙖𝙣𝙙 𝙞𝙣𝙩𝙚𝙧𝙖𝙘𝙩𝙞𝙣𝙜 𝙬𝙞𝙩𝙝 𝙥𝙚𝙤𝙥𝙡𝙚?
Many franchise businesses are based on people relations and customer service. There is interaction with all those at the franchisor headquarters, other franchisees, employees and customers. You will do best if you have a track record of good relationships with employers, supervisors and fellow work associates.
Considering a franchise business is akin to job hunting. Just as you are carefully weighing all the franchise has to offer, they are interviewing you to know if you will make a good addition to their franchise network. Just because you have the amount needed to invest in the franchise doesn’t mean the franchisor will award it to you. One financially qualified candidate considering a senior care resale opportunity bombed at Discovery Day. Several franchisor department heads took him to dinner that evening and he couldn’t hold a conversation. They asked themselves how he would be able to converse with customers and employees if he couldn’t communicate with those at headquarters. He left without an award offer. It has to be the right fit for both parties.
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