Are you willing to completely follow the franchise system? The very key to franchising success is the consistency of product and service customers find from one franchise to another. When you display the sign and logo of a franchise, you are indicating to customers that you follow a particular system. People who are extremely entrepreneurial in the sense that they do not like to conform to a predetermined formula should be very careful about buying a franchise.
Many franchised businesses are based on people relations. Your ability to interact well with your franchisor, other franchisees, your employees and your customers cannot be emphasized enough. A negative, critical franchise owner can be a detriment to the entire franchise system.
You must have a track record of good relationships with employers, supervisors and fellow employees. Can you afford the franchise?
One of the major causes of business failure is under capitalization. While the franchisor will be able to give you a good idea of the start-up costs, sometimes these will vary due to leasehold improvements needs and other valuables. You will need enough money to not only open your franchise, but to run it until such a time as it is profitable.
For some franchises, that may take a year. Remember, it is better to start out with more money than you think you will need rather than less. Have you carefully studied the legal documents?
Franchisors are required to prepare a document called the franchise disclosure document. This document will give you pertinent information about the franchise. It will also contain the franchise agreement that you will sign. This agreement will govern your relationship with the franchisor for the term of the contract.
The disclosure document is a vital document. It should be studied very carefully and discussed with your lawyer. Does the franchise you are considering have a track record of success? You should get to know the principal directors of the company—their business background and how profitable their franchise has been. Money is certainly a good motivator, but be cautious here. Buying a franchise is not a guarantee for financial success. It requires a tremendous amount of discipline, hard work, and patience.
As with any new business venture, it will take time to establish your business, your customer base, and fine-tune your operations.
While increasing your earning potential is a great motivator, you should also enjoy working hard, building your franchise business, and being a proud business owner. Answer 3 Go for it if you enjoy being your own boss. When you own a business or franchise, you call the shots — you are the captain of the ship. If you work well independently and are self-motivated, then owning a franchise could be a good fit for you.
Not to say that it is slave work, but remember, this is your investment so it will require you to put in extra hours and it is common not to make a lot of money in the first two years of your franchise. You will have to be patient. However, there is solace in the fact that when you own a franchise, you receive a lot of support and training from the franchisor — which is a significant benefit of being a franchisee.
Answer 6 Regardless of the angle, franchising is considered a risk. While there are fewer risks involved in the world of franchising, there is still a risk involved. You can mitigate some of the risk by carefully assessing your franchise options before buying. Be sure to have candid conversations with the franchisor about their business model, challenges, opportunities, etc.
Talk to many different franchise owners to get their perspectives. Do those owners have similar personality traits as you do? Do you relate to them? Can you see yourself in their shoes?
Ask the franchisor for their honest assessment of you — do they think you have what it takes to be successful as a franchise owner? Answer 7 Having a negative outlook is not an affordable luxury in this business.
It needs to be a priority of yours, should you go into the franchise world, to maintain a positive attitude — it is a precursor to success. Answer 8 Just as it is imperative to have a positive outlook, it is also important to have and utilize good people skills. Also, as a business owner, you will no doubt be managing people.
It is very helpful to have management experience, and more importantly, successful management experience! Answer 9 The foremost reason for the success of franchising as an industry is because the learning curve is shifted from franchisor to the franchisee.
Chris Conner has spent the last decade in the franchise industry working with several hundred franchise systems in management, franchise sales and franchise development work. Below he shares four steps that will help those interested choose the right franchise for them. Franchising is an incredible segment of small business.
Not all franchises are created equal and the reality is that the franchisor and in particular the CEO of the franchise system has enormous impact on how successful or unsuccessful a franchise system might be in its endeavor to scale through franchising. The great franchises have one common trait: the franchisor looks to the franchisees as their partners and cares about them as much as they do their own businesses.
Small business owners or genuine entrepreneurs have a hard time following rules and enjoy the complete freedom of making unhindered decisions as they run their business and take their own risks in building their brand. A franchise owner is someone who prefers the structure, guidelines and proven business system that comes with a franchise offering.
If franchising is the choice, continue on with your search! Generally, most franchises will require that you have a certain amount of fixed capital to start your business. This amount might be for equipment, construction, inventory, supplies and other items needed to open the doors and start the franchised business model.
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