Many people may think that franchises are just a new way to make money. They believe you take an existing business model, drop it in a new location, and watch the profits roll in. But franchise owners walk away with more than profits. They gain a greater understanding of how business works through hands-on experiences.
There’s a lot to being a franchisee. You have to follow company processes. You’re accountable for spreading the company name into new areas. You have to hire the right people to make it happen. And you’re not even an employee yourself.
While these responsibilities may seem like a lot to take on, they’re actually fantastic learning opportunities. In fact, learning from first-hand experience is one of the most valuable things about being a franchisee.
Here are some of the ways that stepping into the role of franchisee turns you into a better business owner.
You aren’t thrown into the ring to fend for yourself as a franchisee. The franchisor is there as your partner and number one supporter. He or she provides you with a plan of action so you know how to execute. This “secret sauce” is the business playbook, the new bible for running all operations. Franchisors distribute this model to all franchisees to ensure a systematic approach to business.
As you follow these tried-and-true processes, you’ll learn more about what makes a great business model tick. You find out what type of support you need and the questions you should ask. You’ll also realize which tools you need for success, like marketing materials or advertising packages.
It also teaches you the importance of established processes. From training to marketing to customer service, a robust business model offers many processes for how to navigate …Read More
Franchisees usually benefit from a ready-made, tried-and-tested business model from the franchisor, which often includes a known brand, marketing strategy, and benefits associated with economies of scale when buying supplies and other relevant business inputs.
That package of goodies, however, doesn’t come without a price tag – sometimes a hefty one, depending on the franchise brand you want to associate with. In addition to a franchise fee, which typically ranges from $20,000 to $50,000, franchisees often have to meet contractor and professional fees, as well as costs associated with signage and inventory. As with any other business, they also have to raise sufficient working capital to launch the business and keep it running until it breaks even.
Franchisees must always be on the lookout for funding opportunities to help with some of these costs. Because of the highly competitive nature of business funding, it pays to build a business that will not only get loan approvals from banks and other traditional lenders but also attract independent investors, including private equity firms that might have more favorable lending terms.
Editor’s note: Looking for financing for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.
Here are a few tips to help you build an investor-friendly franchise business.
When you’re looking to bring investors into your franchise business, remember that you’ll be adding another independent party, the investor, into an already complex web of interactions. To ensure things run smoothly, it’s crucial to take up the services of a franchise attorney from the get-go who will help with things like the franchise agreement, the franchise disclosure document, and issues of liability that often carry serious implications for franchise businesses.
Liability issues can weigh heavily on any business, …Read More
Before diving into the role or a franchisee, vet yourself to make sure you’re the right fit for this business model. Contemplate the following questions to see if you’re cut out for the franchise life.
If you’re a “my way or the highway” type of person, franchising isn’t for you. Franchisees operate by the playbook of the franchisor. The company gives new franchise partners its own proven business model so they have a foundation to work from. There’s a plan in place and it’s up to the franchisee to execute it. It’s like being a business owner with a head start.
The franchisor won’t micromanage you, but you have to play by the rules. Franchisees are still welcome to come up with new ideas, but the core of the business is set in stone. The company has gone through a lot of trial and error to solidify the existing model and ensure a consistent experience across all franchise locations.
Some people work better alone and there’s nothing wrong with that. Others work better in a team setting. Franchisees succeed because they work collectively with their franchisor, other franchisees and team members. This teamwork helps to clear hurdles and view problems from different perspectives.
In a franchisee role, you’ll constantly be communicating and collaborating with others. You’re not a one-man band – you’re playing in a symphony. It’s how you will learn and grow the business.
You’ll work with and talk to the franchisor frequently. Through this constant communication, you create trust and accountability. This two-way conversation lets you reach out when you need help or want new ideas for growing the …Read More