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Franchising...Where Do You Start?
A Short Story...
Your Decision to Buy Your Own Franchise BusinessIf you’re reading this article, you’re likely interested in buying a franchise business. You’re also probably not sure what to expect as you venture into the universe of franchises that might be available to you. I could put together some sort of list for you to follow but I thought for this report I would ask you to use your imagination. I will describe the process, the experience you will have, but through an imaginary set of eyes. Please, follow along with me as I describe the process, even though your situation might be slightly different. Most of the adventure will mirror what you are trying to accomplish and the experiences that follow.
Your Work History
So, please imagine, for the sake of this franchising story, that you’re a man or woman in his/her late 40’s or early 50’s. You have a working wife/husband and two teenagers at home both of which would love to have an opportunity to attend the college of their choice.
You’re a hard working man/woman whose career has spanned some 25 years dabbling in a few different unsatisfying jobs but ultimately, you settled in quite nicely as an executive recruiter for a large corporation.
You were content with your income and even managed to put a few bucks away for that rainy day, when your children were ready for university. Even so, you had always wondered what it would be like to “be your own boss.” You’ve always wanted to have complete control of your destiny and to have the freedom to come and go whenever you wanted. You’ve always wanted to build a business for your future. Something your family could be proud of and maybe be a part of.
Then, one day, your boss sadly informs you, that you have been downsized. Business has been slow and corporate is forced to “get leaner”. Your department has become expendable. You’re fortunate that you have some severance pay or a golden parachute to cover you for a while. What are you going to do with your day to day life? You’re too young to retire and financially your nest egg isn’t enough to sustain you and your wife/husband and aspiring children for a lifetime.
You've Been Downsized...What Are Your Options?
You have a few options to consider. You can scout the job market but business is down all over and corporate America is outsourcing many new jobs and hiring younger workers. Do you really want to go to work for someone again? What happens 5 years from now? Will you be downsized again at 55 years old. Then what?
Should you consider buying your own business? You hear the franchise business is not quite as risky and you like the idea of an experienced mentor to guide you through the process of building a business. So, you gather the family and discuss the choices you have. It’s very important that the family as a whole be on board with your decision to start your own business, become your own boss. It won’t be easy. It requires a lot of hard work and certainly long hours in the beginning.
A Personal Financial Audit
Financially, you’ll have to do an audit of your financial statement. You can’t expect to immediately earn what you were making as an executive recruiter. It will take a while to get there. Your family will have to budget and make some sacrifices. Nonetheless, your family has decided to move forward and pursue owning your own franchise business.
What to Expect When Choosing the Right Franchise for YouSo, now what do you do? There are about 3,000 franchise companies to choose from. What are your interests, what would you like to do? Do you have business skills? Are you a good salesman or a top manager? Maybe you’re good with your hands, or you have strong communication skills and are a people person. Would you get bored standing behind a counter all day? Do you need to get out and network your business and be around people? These are all very important questions to consider as you search for the franchise business of your dreams.
You discover there are franchise consultants that can help you with these questions. A good franchise consultant will help you set your franchise goals, establish a plan, get the plan into action, and help you stay on track all along the way.
Your other option would be to use an online franchise directory to browse the thousands of franchise opportunities that might be available to you where you want live and operate your franchise business. You can request information direct from the franchisor and research the franchises you have an interest in. Most franchise companies have qualified consultants to help determine if you’re a good fit for their franchise opportunity.
Franchise Validation and CompatibilityEither way, at the end of the day, you’ll likely have narrowed your search to 3-4 franchises that have territory where you live that interest you. You’ll be asked to go through a “validation” process with the franchisor. They want to see if you’re a good fit for them and you’ll want to validate them as the franchisor you want to joint venture with.
Typically, you’ll end up with 1 or 2 franchise companies you will choose to pursue further. If you’ve met the set of qualifying standards of the franchisor, you’ll be invited to attend their “Discovery Day.” Here you will have an opportunity to personally meet with key personnel of the franchise company. This might be possible in your local market or you may need to travel to a regional training facility or to the headquarters of the franchisor.
It's Time For You to Make a Decision
Next, it’s time for you to make a decision. It’s probably taken you 2-4 weeks to do all your homework and complete the validation process. You should have all the information you need to determine which franchise is right for you. When you make your choice you will be awarded a franchise.
You're Buying Your Own Food FranchiseImagine that you’re opening your own food franchise. To do this, you’ve had to meet certain liquid capital (not borrowed funds) and net worth requirements and fit the profile of an ideal franchise candidate.
You’ll pay an initial franchise fee at the time the franchise is awarded. The initial fee varies from franchise to franchise but usually covers the cost of training, territory analysis, site identification, and franchise development costs.
The Training Program
Then you’ll go through an intensive training program at franchise headquarters or at regional facilities which may include:
- How to prepare your products and deliver your services to your customer
- How to manage the business
- How to hire and fire employees
- How to market your business
- Sales and Networking
- Operations
- Corporate policies and procedures
As a franchisee, you’ll also have to do everything in compliance with the consistency standards of the franchisor and agree to at least a 10 year term.
Your Investment
Once you’ve completed training and your site has been located, you’re ready to go. You’ll have to pay rental deposits, utility deposits, and telephone deposits, buy furniture and fixtures, purchase an initial inventory, initial signage, initial office supplies, and hire your staff to prepare for your grand opening gala. All along the way, you’ll get constant support from your franchisor’s field consultant.
How much money you make depends on many things, including the location of your franchise business, customer service, product quality and your ability to manage and control the business.
David Yoches
www.Best100Franchises.com
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