A franchise is a business that is owned by somebody else but is sold to another interested party who is only interested in the trade name that the original owners builded up for it. So the person who sells the business sells the name as well as the goodwill that he has established over the years that he/she has been operating it. Simply knowing that there is a franchise on sale is half the job done, finding the best franchise opportunities is perhaps the most difficult part. What is generally considered to be the best franchise opportunity is one that has a lot of potential for growth. When you want to determine which franchise can grow bigger than the name it has established over the past couple of years it is important that you do your home work. For every opportunity you get ask for the business records for the past few years so as to determine if it is viable. The reason for this is that on the surface it might seem as if buying a Ford dealership as a franchise is lucrative but in actual fact it is the worst decisions you will ever make. Disregard common perceptions and get deep into the core of a particular business to find out how successful it has been in current times. Some of the best opportunities out there are not exactly the ones you think are the most popular. Be careful of ignoring smaller franchises since they have not been around for a long enough time. Sometimes the companies that have a few years of operating have no severe bad reputations and they are the perfect place to start growing your business. In addition to this any franchise that meets the needs of the age is one worth the investment. You don’t want a company that is hardly innovative from the get go because it will stunt future growth tremendously. But a company that is advanced and technologically aware is healthy to own. visite our site for more info and guiding
It happens to nearly everyone at some point in their life: The desire to start a business of their own.
The motivation varies quite a bit from person to person, but common reasons include: The need to escape a grueling schedule, workload, commute, an over-bearing boss, or just the need to feel more appreciated and to have one’s rewards more closely coupled with the amount of effort put in.
When I started my own business many years ago, the motivation was pure and simple. I was excited by an interesting technology that produced a novel product which I felt had a ready market in the community in where I lived.
I chose a fairly tough road though, for I had technical R&D to do, production processes to work out, suppliers to source, packaging to design and hardest of all, I had to introduce a brand new product into a market that wasn’t sure if it really wanted it.
After years of hard work I found myself so busy that I hardly had time to breathe and, in the surest sign of all that I was becoming successful, competitors started entering the market copying almost everything I had done.
Although I don’t regret any of it, I often wonder if taking the hard road really is the best option. There are, after all, literally thousands of successful business models out there in the form of franchises, which can be replicated successfully by doing little more than following a written set of instructions and with the added benefit of a personal coach being on hand to answer questions and help you out of difficulty, if needed.
Oh, did I mention that you will still have to work hard? But not many of us are frightened about that, especially if it is in your own business.
I am, of course, talking about franchising or franchise-like businesses and they are everywhere. In fact franchising is growing at such an increasingly rapid rate that it is easy to suggest that the take-up rate of new franchises will one day exceed that of non-franchise businesses.
The Benefits of Franchising
For the would-be new business owner this produces a whole new set of problems. There are so many franchises available, how do you select one? Is it best to go with the tried-and-true, the big names that everybody knows, like McDonald’s and Subway? Or are you better off hitching your fortunes to a new concept, which usually will have far more manageble investment requirements.
It is not an easy decision, but one which you must take with the utmost care. Your savings from your past efforts and the future of you and your family are at stake here. Tread carefully.
Finding a Suitable Franchise
What is the best way to find a franchise? Contrary to what you might think, using the search engines is not really the best. You are going to be overloaded with too much choice and too much repetition.
You are far better off visiting one of the many web portals that organize franchise opportunities in a systematic way. In many of them you will be able to search by the investment amount required, the market they operate in and whether they are home-based or not. Then, rather than contacting all of the franchisors individually, you can fill-in your contact details once only on the web portal which will then pass on your request to the franchisors for them to contact you, or send you free information packs.
Selecting a web portal to use isn’t as hard as eventually selecting a franchise, but be aware that some portals only list franchises that have paid for advertising and so the choice they are presenting may be limited.
So good luck in your search and please investigate as many franchisors as you possibly can before making a decision. The importance of finding one that best suits your capabilities, ambitions, budget and lifestyle can’t be over-stated.
An entrepreneur is not just someone that has turned a new idea into a business. An entrepreneur can also refer to a franchisee, “an individual who purchases the rights to use a company’s trademarked name and business model to do business” (http://franchises.about.com/od/franchiseglossary/g/franchisee.htm). Although a franchise may require quite a bit more capital than starting a business from scratch, the rate of return is generally higher and occurs much quicker.
There are several reasons to buy a franchise:
1 out of every 12 retail stores is a franchise.
The cumbersome process of creating a business plan, marketing plan, and financial plan has already been done by experts in the industry.
The purchase is all inclusive; the infrastructure, the customers, suppliers, employees, equipment, and systems as well.
May receive good insight and advice from previous owners.
Lenders are more likely to finance a business with a proven track record.
Profitability is not in question as it would be in a startup.
There are drawbacks to becoming a franchisee as well:
Extremely high start-up costs.
Most franchisees must make royalty payments to the franchisor each month based on a percentage of sales.
Many franchisees are obligated to make regular contributions to the franchisor’s advertising fund.
Most franchisors impose price, appearance, and design standards, limiting control over how the franchise is operated.
The franchisor has the right to terminate your agreement if the franchises standard operating procedure is violated in any way.
Cost
The two costs that are the most surprising to the prospective franchisee are the Franchise Fee and the Royalty Payment. The Franchise Fee is the one time and often non-refundable start-up fee. This will most likely be the highest of any fee you will pay and can range from $500.00 to well over $1million. The second major cost, the Royalty Payment, is a recurring fee that is a percentage of your gross monthly sales. Most of the larger well known franchises have monthly minimums for this fee that can impair profitability during slow seasons.
How do you select the type of franchise to buy?
Know your financial capability. Know the franchises capital requirement.
What do you like to do? Match the franchise category with what you love.
Speak to a franchise representative. They are the first point of contact for all inquiries and can answer any question a potential franchisee will have.
Once you have all questions answered and have narrowed down the franchise(s) you are interested in, you will complete a formal franchise application including a credit and background check. Once you are cleared to move forward, by law the franchisor is required to send you a Franchise Disclosure Document (FDD). The FDD will include information on the franchise that will assist in your decision making process such as: history of franchise and its key management, financial statements, litigation, franchise openings/closings/terminations, franchisee contacts, franchise agreement, requirements, and more. Source: www.franchise.com
Here are some well known franchises available for purchase that have made Entrepreneurs Top 10 list for 2009:
America’s top franchises from Entrepreneur’s Franchise 500
1. Subway
2. McDonald’s
3. Liberty Tax Service
4. Sonic Drive In Restaurants
5. InterContinental Hotels Group
6. Ace Hardware Corp.
7. Pizza Hut
8. UPS Store, The/Mail Boxes Etc.
9. Circle K
10. Papa John’s Int’l. Inc.
Int’l. Inc.
3. Servpro
4. ServiceMaster Clean
5. Snap-on Tools
6. Stratus Building Solutions
7. Matco Tools
8. Jazzercise Inc.
9. Vanguard Cleaning Systems
10. Bonus Building Care
Top franchises you can start for less than $50,000
1. Instant Tax Service
2. Jani-King
3. Jan-Pro Franchising Int’l. Inc.
4. Kumon Math & Reading Centers
5. ServiceMaster Clean
6. Merle Norman Cosmetics
7. Stratus Building Solutions
8. Jazzercise Inc.
9. Vanguard Cleaning Systems
10. RE/MAX Int’l. Inc.
Fastest-growing franchises from the Franchise 500
1. Jan-Pro Franchising Int’l. Inc.
2. Subway
3. Instant Tax Service
4. Stratus Building Solutions
5. Snap Fitness Inc.
6. Dunkin’ Donuts
7. Jazzercise Inc.
8. Bonus Building Care
9. Anytime Fitness
10. Vanguard Cleaning Systems
If you are concerned about the franchise fee, royalty fee and initial investment, here are a few examples of some well-known franchises:
Subway:
Total investment: $78.6K-238.3K
Franchise fee: $15K
Ongoing royalty fee: 8%
McDonalds:
Total investment: $950.2K-1.8M
Franchise fee: $45K
Ongoing royalty fee: 12.5%+
Liberty Tax:
Total investment: $56.8K-69.9K
Franchise fee: $40K
Ongoing royalty fee: Varies
If you can imagine purchasing the rights to a well known company’s name, getting access to expert training, experiencing a proven revenue stream and unwavering brand recognition then the decision boils down to three simple questions; Do you have the capital? Do you want access to a proven business model? Are you willing to give up significant control in how you do business? If you’ve answered yes to all three, it’s time to seriously look into becoming a franchisee.
Although franchising is widely known to offer aspiring, new business owners the best possible chance of success with the least amount of risk, there are some myths out there that can tend to alienate even the most die-hard entrepreneur. Below, I clear up some common franchise misconceptions that will breathe new life into your goal of owning a franchise business.
Owning A Franchise Guarantees Success. You need to get clear on the myth that by owning a franchise, you absolutely cannot fail. That’s a crock. There are numerous factors, both controllable and uncontrollable, that can determine the fate of your success. However, a huge statistic is in your corner: overall, the success rate of franchising is as high as 95%. Of independent start-ups, on the other hand, only about 2/3 are still in business after 2 years and, sadly, less than half survive 4 years, according to the Small Business Association. No guarantees here, but with a determined effort on your part, franchising is the obvious choice.
Mr. Handyman, for example, a homeowners and commercial maintenance and repair franchise, has over 300 franchise units across the United States and Canada. The Home Improvement market is huge and continues to grow, with Americans spending more money on remodeling, renovating and decorating than ever before. The brand isn’t a household name like Mcdonalds, but this home based franchise is a highly successful one, with a much smaller investment required.
There are hundreds of consulting type franchises that most people have never heard of by name. Many are extremely successful, with much less overhead, than fast food or automotive franchises.
A significant investment is involved, so the only one getting rich is the franchisor. What a joke. Franchisors absolutely need profitable, successful franchisees to flourish. The fact that ongoing royalties are paid by franchisees on a regular basis indicates that a fair an equitable relationship exists between the two parties, and that the franchise is profitable. If they weren’t, who would pay these fees? A poor performing franchisee will not last very long. The franchising business model is structured specifically so that both the franchisor and the franchisee succeed.
Brand Name Means Everything. While You Cannot minimize the importance of a highly recognizable brand name, it is only part of the equation. Brand is very significant with burger and automotive franchises. However, there are many franchise categories, some you may not even be aware of, where the brand name clearly isn’t the main focus, but that does not translate to a lack of success.
Bigger Is Always Better. Not true, especially in the franchising world. Think about it: would you rather invest every last dime you have into a fast food business, make a decent income, and deal with high turnover, high overhead, theft, worry about what is going on at your store with the brand new teenager that is working the Saturday night shift? Or, would you prefer a home-based service franchise that costs $50,000 (or less), allows for plenty of family and free time, and generates as good or even better income than the food business? Most potential franchisees are better suited, and would even prefer, a small franchise with limited, but highly skilled, employees.
Owning A Franchise Means You’re On Your Own. Nothing could be further from the truth. Yes, ultimately, whether a franchise succeeds or fails is the responsibility of the franchisee. However, a huge benefit of being a franchisee is that there is always a support staff, provided by the franchisor, ready to help you with any issue you may encounter regarding your business. Some offer 24-hour call centers. You are most definitely in business for yourself, but not by yourself.
Because the general disposition of our society tends to be negative, positive aspects regarding anything, including franchising, can become distorted. I’ve focused on clearing up five of them here, although there are more, to be sure. Do your research and align yourself with an experienced franchise consultant who can provide you with the necessary facts so that you’re able to make an educated decision about a specific business opportunity.
The franchise model is a great way to establish a company and may well be the quickest route to market. Once the brand is recognised on a national or international platform it becomes easier to develop and enhance new product lines. By starting your own franchise, your place in the market could grow faster than going at it alone.
This may be true for some businesses but not all businesses are suitable for adaptation to the franchise model. You must evaluate your business and assess whether or not it can be taught to individuals who are not from a business background. It is important to understand the costs involved especially with regards to recruiting your franchisees.
You must consider all aspects of your business with relation to the franchise model. Being selective in your recruitment is one of many points to take into account before any decision is made. You should ask yourself what type of person it takes to make a successful business and find out who possesses such traits from the people who are interested in becoming franchisees for your company.
It is wise to investigate methods of training as you will have to decide who will train your franchisees and provide constant support. Your franchisees are only able to make a success of the business if they have sufficient product knowledge which is solely obtainable through the quality of training they will embark. First, you should look at the unique selling points of your business and then educate your franchisees to the level where they are confident it their pitch.
Once you have researched the practices involved with setting up your own franchise, and are happy with results, then you are ready to seek expert advice. There are many administrational processes to navigate before launching your franchise and you will need guidance in producing franchise agreements, training systems, support mechanisms and marketing material. The franchise agreement is one of the most integral parts of your business, so it is best to consult a franchise lawyer that can help produce a professional document for you.
If you choose to outsource your training as opposed to offering it in house, you should look at a range of training providers then decide which company will do the best job, and there are many good training providers, so they must be examined in depth. The companies you come across should not only provide initial training to your franchisees, but also supply constant support whenever necessary.
You may need assistance with your marketing materials so a marketing expert is worth investing in and should be preferably selected from the franchise industry as this way they will have inside knowledge of how to target franchise buyers productively. It is crucial for them to have an understanding of what your franchise entails and they should be in a position to mange your business sufficiently.
The franchise route may seem a daunting challenge especially when entering new markets however, if the procedure is carried out strategically, your business can become a remarkable success resulting in a long term lucrative business.
If you are at a point in your career where you’re entertaining the possibility of buying a franchise, you need to understand the psychology that is behind a franchisor’s decision to award a franchise to the “right” person. There are certain, essential skills and personality traits that encompass a “model” franchisee, and before you go any further down the road to franchise ownership, you had better do a self-inventory and make absolute certain you have them.
Obviously, if you are considering a handyman or home improvement franchise and you’ve never used a hammer or a saw, this could be a serious problem. Or if you are looking at a certain business to business franchise, but you hate selling, you are all but guaranteeing misery. But those aren’t the king of skills that I’m referring to here.
Regardless of which specific franchise you are considering, you need to possess and exhibit some basic, key skills that will fuel the overall potential for success of your franchise business. Franchisors have spent plenty of time and money researching what the profile of the ideal
franchisee looks like. Here are 7 mandatory traits:
Commitment to following a proven system. Franchise systems are in place because they work. It’s that simple. If you’re nickname is “Genius” because of your brilliant, super creative ideas that you come up with daily, then franchising is not for you. Go back and read the previous sentence again. It is imperative that you are passionate about the product or service and are completely committed to executing the company’s marketing plan. If not, consider
starting your own business.
Excellent People Skills. You need to enjoy working well with others as a team. If you don’t like interacting with others, you’ll become stressed, your employees and customers will sense it, and ultimately your business will suffer. Instead, display the positive behavior that you want your
employees to model when dealing with your customers. A happy, positive, “customer is always right” attitude must prevail at all times by you, your managers, and the
employees.
Strong Work Ethic. A must for any potential
franchisee. If you don’t possess strong, disciplined work habits and have burning desire, you might as well work for someone else and punch a time clock. Any successful
franchisee will tell you that they work until the job is done. They don’t quit when the whistle blows. They’ll do anything it takes to get the job done. Having true passion to work for yourself will tend bring out this work ethic automatically.
Well-Capitalized. Obviously, franchising costs can be significant. Franchisors will not move forward with candidates that are under capitalized. You’re facing an initial investment, the franchise fee, and ongoing royalties due to the franchisor. Most small to medium sized franchises require a franchise fee of $5,000 up to $30,000. Royalties are usually a percentage of the income that your business generates, which you in turn pay the franchisor, typically ranging from 3%-7%. Don’t let these costs scare you, though. In return, you are receiving the use of the “brand”, which is significant in that you’ll attract customers immediately. Many franchisors offer assistance with financing. Also, you’ll tap into the volume discounts on product purchases you’re entitled to as a result of being a
franchisee.
Willingness To Ask Questions. Asking great questions is a true sign of strength. A successful
franchisee will ask the franchisor’s support team or another
franchisee for advice when he/she is stuck or unclear. You must be coachable and be prepared to implement the advice you receive.
Risk Averse. While it’s true that there is no guarantee that you will be a successful
franchisee and there is some risk involved, your chances of failing are substantially reduced with a franchise, as opposed to starting your own business from scratch. Statistically speaking, U.S. Department of Commerce states that franchise businesses are exponentially more likely to succeed than individual new start-ups.
Finally, research,
research,
research. And seek out assistance. It’s virtually impossible to conduct a thorough franchise search alone. A seasoned franchise consultant can arm you with the knowledge you need to make an educated decision on the business that is the closest fit to your specific requirements.
Franchising is a great business model if you have the necessary skills and mindset to follow a winning formula. If you truly possess the characteristics spelled out above, chances are you have a solid foundation for success as a
franchisee.
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