Franchise Blog

There are not too many of us that have not thought about owning our own business at one time or another. Perhaps we considered that punching a time clock and trading our precious time for money just did not feel right or maybe we would just like to be in charge and not be constantly told what to do. For whatever reason it seems that many have added “owning their own business” as part of their American Dream and there is no one that can really blame them.

So, how does one go about starting their own business? Well, it’s not as easy as it sounds, as first you need the skill to run a business and you need experience and knowledge in a particular niche, and then you need the money. The third item is probably one of the most important things no matter what type of business you choose. But what if you have no particular trade or skill and you’ve never run a business before, then what can you do?

Well, franchising is one option because franchising companies train their new franchisees as part of the deal. And even if you have little experience most franchisors are willing to work with you and get you up to speed. Franchising Companies also have financing options and often, work with banks, leasing companies and some assist in financing too.

If you’ve ever considered owning your own business, then you owe it to yourself to take a look at the franchising model and determine if it is right for you. No, it’s not the right avenue for every future business person, but you won’t know if it makes sense for your situation, until you check it out. So, please think on this.

For many entrepreneurs, one of the hardest parts of purchasing a franchise business can often be the simple act of deciding which franchise to go with. It sounds like a small step in the process, but it’s the part of the process that costs the most money and the one decision that everything else rides on, so it makes sense that it could stir a little trepidation and indecision in the heart of even the most determined entrepreneur. There are probably as many different ways of getting around that uneasiness as there are different people who have to do it, but one of the easiest is just visiting a franchise consultant.

Franchise Consultants Are Your Friend

Much like having a good friend to help you walk through a major life decision, working with a franchise consultant is an excellent way to wade through the stressful decision of choosing a franchise opportunity, because the consultant can help you see things from another perspective. Though that may beg the question as to why a person would need a consultant’s perspective as opposed to simply a friend’s, there is good reason to get both. A friend’s counsel in the purchase of a small business is helpful because he knows you, your strengths, and your weaknesses, and can tell you whether certain business types are a good idea for you, but his understanding of the franchise world is most likely limited. On the other hand, though a franchise consultant doesn’t have a longstanding relationship with you, his knowledge of franchises far exceeds both yours and your friends’. With a small battery of questions, he can get enough of an understanding of you to get you on your way toward the business that’s got your name on it.

If you’re at a loss for what business purchase is the right choice for you, there are people to help you. Three big names in the franchise consultation are Franchoice, MatchPoint, and MyFranchisePath.com.

Having helped thousands of clients so far, Franchoice is one of the world leaders in the industry: they provide free initial consultations, only require that clients have at least $100,000 net worth and $20,000 to invest, and seek to understand you as a person as well as they understand their franchises. Similarly, MatchPoint consultants are not concerned with making sales, but rather with connecting clients with the best franchise businesses for them. Their greatest tool is their special Heat Map Profiling System, which uses answers from a short test to analyze a client’s personality, skills, and preferences, matching them with the best possible business opportunities. Finally, MyFranchisePath.com is chiefly concerned with understanding their clients and their franchises as well as they can, in order to make great business matches. Both of these companies have professional consultants ready and willing to help you find the business that is right for you.

You Could Be A Consultant, Too

Talking to a consultant, though, may not be enough to help everyone find and purchase the small business that’s right for them. In truth, some may not actually find the right franchise opportunity, but others may find that what they really want to do is the very thing their consultant is doing for them.

Should that be the case for you, Franchise Consultant Network is the perfect opportunity for breaking into the home business world of franchise consultation. All you need is a longing to be your own boss, the genuine desire to help other people achieve their business goals, and a strong knack for interpersonal communication. And having no previous knowledge of franchises and franchising is a non-issue, because the franchisor can teach you everything you need to know as long as you want to learn. There are many perks to the business, one of the greatest being the seemingly limitless potential for obtaining clients. Another great benefit of this business is that it’s a fully home based business: with only a laptop and a phone, any franchisee is ready to go. And finally, there is money to be made in this industry. In fact, some work from home Franchise Consultant Network franchisees have reported earnings of over $100,000 in the first year.

Whether you’re looking for the right business and need to seek some counsel in regard to that decision or you know exactly what you want to do, and helping others toward the businesses of their dreams is it, franchise consultation is the way to go. In either case, calling up and getting a free consultation from a franchise consultant may be a good idea. You can either get some wisdom regarding business opportunities in an array of fields or learn something from a person who’s already doing what you want to.

If you are the VP of Marketing, the Director of Marketing, or the marketing manager for a large franchise organization, let me just say that I know your pain. From my experience working with franchisor organizations, the biggest potential source of pain for internal marketing gurus like you also happens to be potentially our biggest leverage point for improving sales: the relationships you have with your franchisees.

The value of strong franchisor-franchisee relationships cannot be overemphasized. This is because the franchisees collectively hold in their hands a great portion of the responsibility for the success of the organization. In short, it is important to the health of the organization that they are well-supported!

Improving the relationship between franchisor marketing staff and the franchisees whom they support is not just a matter of having good people skills (although that doesn’t hurt!). At its essence, it boils down to an issue of how smooth and efficient are the information and approval flows between you. The bottom line: your marketing staff holds not only information that the franchisee needs, but also the ability to say “go” on key initiatives and requests from the franchisees. And, I have found that there are certain tasks that are actually better to hand off to the decision-making authority of the franchisees (if done properly), resulting in less aggravation and better revenues for all involved.

Drawing upon the collective wisdom I have garnered from working directly with multiple franchisor consultants and heads of marketing at franchisor companies, here I offer you 5 tips for improving your relationships with your franchisees:

Tip #1: Standardize your message formatting, style and frequency: Overwhelmed by e-mails and phone calls from frenzied franchisees? It may be time to streamline your communications with them. Here’s how to get started: first, categorize the top 5-10 reasons franchisees regularly contact your team. Next, determine which of these could be reduced or avoided completely if you were to improve how you communicate with them. The more consistent you are with your message format (e.g., e-mails, letters), message style (i.e., the writing quality and style with which you present the information), and frequency (i.e., when and how often you send out certain types of messages), the more clear the information will become to franchisees – and the less often they will be contacting you with follow-up questions.

Tip #2: Use the KISS principle when creating and rolling out new marketing programs: The KISS principle (Keep it Simple, Stupid) is a wonderful guideline for getting anything done, especially when it requires getting others motivated and on board! When rolling out new programs, make the rules, processes and procedures exceedingly clear. Minimize potentially confusing elements like unnecessarily complicated procedures, and write everything down in terms of what the franchisee should do (and by when). Charts and diagrams can also be a huge help! Your goal should be that 95% of franchisees will receive your communications and be fully-informed without needing to contact you again with questions.

Tip #3: Pre-approve all promotional materials for no-hassle administration and better brand control: One of the biggest headaches that franchisor marketing managers grapple with is having to constantly approve a huge range of different promotional materials from different franchisees. Varying font sizes, different shades of red (or green or blue!), disparate offers and even different types of messaging. Approving and/or requesting changes to all of these materials, even if you have a solid style guide in effect, can be maddening and time-consuming for all involved. Instead, create a set of pre-approved materials (postcards, brochures, mailers, in-store displays, banners) and make them available for franchisees to order. If you do, you will eliminate completely the need to field even one more call or e-mail about approving new materials from overly “creative” franchisees.

Tip #4: Unify all branding and direct mail efforts by using a single ordering system: Direct mail is one of the most powerful tools that franchisees have to promote their businesses. When executed correctly, direct mail is sent only to those prospects most likely to respond. However, putting together an effective mail campaign can prove to be too much for the average franchisee. Questions about how to source a good list, what type of customers to target, and what creative to use can be overwhelming for the typical franchisee. Instead, do everyone in your organization a favor and offer your users a single direct mail online ordering system. Franchisees can run live list counts, customize the creative with their own store address info and choice of offer, and place the order. No hassle, no headaches – and no calling the corporate marketing office for advice.

Tip #5: Help your franchisees analyze their marketing results to keep them abreast of program effectiveness: One of the best value-added services that the corporate marketing office can offer franchisees in support of their marketing efforts is direct mail response analysis and other customer analytics programs. Most franchisees do not have the ability to accurately scan coupon barcodes, analyze data and then determine whether their recent marketing efforts were a boom or a bust. Also, by aggregating such analyses across multiple locations, your office can look for macro patterns and then share the results with all franchisees.

Franchisees can be your biggest source of pain – potentially your best friends. The secret to making it a successful relationship is to simplify your communication, make it easier for them to make good marketing decisions, and offer value-added services. If you do, everyone stands to benefit with a better quality of life at work – and better revenues for the organization!

First off, consider your own financial situation. Are your bills all paid, do you have enough liquid assets, and are you free of debt? If the answer to the preceding questions is yes, then you are ready to proceed. Ultimately, financing a franchise boils down to cash flow; do you have enough to fund the franchising without outside help? If you’re wondering how to finance a franchise, if you do not have the money upfront, know that there are a number of options available to you.

Potential franchise owners wishing to work from home are in luck! While starting your own home based franchise business does require an investment, like any other franchise, the investment is much smaller. Franchisors have realized that virtually any business can be successfully run from a home office, and are offering franchisees the opportunity to own their own home based franchise business in numerous categories. Whether you want to be involved in financial services, entertainment, pet care, commercial cleaning, children’s services, or home improvement, you’re sure to find a company offering a franchise opportunity.

Last on our list of dry cleaner franchises is Pressed 4 Time. Simply stated, this company fancies itself as a more refined dry cleaning delivery and pick up service than the competition. They provide office buildings, families and local businesses pickup and delivery service twice a week for shoe repair and dry cleaning needs. Originally begun in 1987, Pressed 4 Time is a massive company with 165 franchises within Canada and the US.

This company provides:
• High levels of repeat business.
• 5 day work week.
• Low initial investment costs.
• A home based business.
• Both single and multi van routes available.
• Exclusive territory.
• A total training program.
• Royalty plan.
• Dry cleaning company relationship established.
• Software for business management.
• A dry cleaning gross profit margin of 50%.

Often, especially in the last 5 years, a large portion of franchise purchases were financed with home equity. Today, with housing prices taking a tumble across the country, the situation has changed dramatically. Even in these challenging economic times it is still very much possible to finance your franchise purchase. The most important thing is to be prepared and to have a strong desire to run your own business.

In general, potential franchise owners need to be aware of their current financial situation, have a prepared balance sheet, know their credit score and upon finding the right franchise, invest time into working on their business plan.

Something else to consider, franchisers often look at several financial criteria when evaluating prospective candidates. The terms that come into play are Liquid Capital, Total Amount of Investment and Overall Net Worth. Each company’s requirements are different. Here is the overview of the main financing options available to you:

1. Commercial Bank Loan
A way to finance your business is to take out a bank loan for part of the cost. To qualify for a bank loan, you will need sufficient personal collateral to secure the loan. Many franchisors have relationships with lending institutions and will assist their franchisees in obtaining these loans.

2. Franchisor
Also, there are some franchise companies who will loan money to their franchisees for a franchise purchase, often at a low interest rate. In this case the franchisor is giving you a “double seal of approval,” once as a franchisee and again as a borrower!
3. Grants
grantsforwomen.org or grants.gov are great resources to get started in searching for grants. These don’t work for everyone and it does take a while to go through the process, but with some persistence, they may be well worth your time.

4. 401(K) or IRA
A popular trend for financing a new business is to take out a loan from a retirement account. If you have an IRA, 401K or other retirement account, you may be able to use that money to invest in a franchise. Essentially you are loaning that money to yourself and saving the interest you would pay to borrow money from an outside party. If your business becomes profitable, your retirement account will also increase. A financial advisor is needed to set this up so you can do this without taking a taxable distribution or incurring penalties.

5. SBA loan
The United States Government is also a resource when looking for money to fund a business. The Small Business Administration (SBA) has programs available to help you with your franchise purchase. While the SBA does not loan you the money, they will be a guarantor of loans made by private and other institutions. This type of loan is popular with first-time franchisees that do not have a track record of running a business.

A solid business plan and great credit history are important for anyone securing any type of loan. Lenders will scrutinize your credit history to determine if you have experience borrowing money and making payments on time. To be approved for a loan, the franchisor you intend to join should have a strong model, a proven concept and a history of success. Majority of franchises I work with are “SBA approved” which greatly expedites the process. You will also have to pay for part of the purchase in cash, as a downpayment, showing that you have some “skin in the game,” and will be willing to work hard to protect your personal investment. There are of various SBA lenders out there, from local banks, to the one that specialize in franchising and even, in specific franchisors.

6. Friends and Family
If you have friends or relatives with money, you may be able to borrow from them, particularly if they have confidence in your entrepreneurial abilities. Private loans are often provided at low interest rates which can be helpful when you are getting started. You may also want to consider having a partner in your new business, both to help you finance the business and to help you run it. Partnerships can be particularly helpful when the partner has strengths in areas where you are inexperienced.

7. Venture Capital
Venture capital is another way you may find financing for your business. Venture capital is provided by an outside group of investors willing to be involved in a high-risk venture with the potential for higher returns and/or a percentage of ownership in the company. However, a venture capitalist’s focus is generally a start-up or struggling business with exceptionally high growth potential, which is not your typical one-unit franchise.

8. Angel Investors
In between the small amount of money you may be able to borrow from family and friends and the large amount of money venture capitalists will loan you, there is another source of financing: the angel investor. An angel investor is a wealthy individual who will provide capital for a business start-up, usually requiring ownership equity in exchange. Because they fund high-risk ventures, they require a high return on their investment.

9. Credit Cards
Credit cards have not been the best source of financing for potential franchisees because of the high interest rates and low credit limits. It usually takes many months before a new business begins to make money and making those high-interest payments can be difficult. Generally it is better to save the credit cards for emergencies and find a better source of financing for your business.

10. Cash
Regardless of your situation, you will need to have cash available in order to complete you franchise purchase. At the very least you will need that money in order to support yourself, to some degree, until your business gets to the break even point. It is essential to have accurate cash flow projections as part of your business plan. In every market cycle there comes an opportunity where entrepreneurs are better off investing their money into something tangible rather then letting cash sit in the bank depreciating under the pressures of inflation.

In the end, the expression that it takes money to make money is as true in franchising as in any other type of business. It will be easier to borrow the money to start your new business if you already have a tidy pile of cash tucked away. Along with this “seed” money, you will also need a great credit record and a history of borrowing and repaying money.

The purpose of this article is to address 10 most common pitfalls people face when looking to start a franchised business.

1. You are being “sold” on why you should have “this business”:

If a sales person from the company is selling you on the idea of why you should buy this franchise, understand it is a biased opinion. Use the information the sales person gives you, but do your OWN research on why YOU should have THIS business

2. Not focusing on the business model and how it matches YOUR lifestyle:

A business name or type may be catchy, but is it the right business for you? Focusing on the business model will match you closer to your best natural choice. A business model will focus on your goals and needs and help you fit it in to your desired lifestyle: number of employees to manage, income you need and want, the number of days you are “open” per week, the number of hours you are “open” we day, the location of your business, etc.

3. Your friends or family tell you it is the “best business to be in”:

A family member or friend might have the best intention, but YOU need to choose. Take their advise and use that to help with your research. They may give you some great information to use in your research, but the research needs to be done by you.

4. No time for “Validation”:

The validation of a franchise is the most critical stage in your research. Validation is merely finding out if the company is doing what they say they can do. You have the ability to contact existing franchisees and interview them. Their success, their concerns, their expectations, their earnings, and their relationship with the franchisor can and should be discussed in a professional and confidential manner. You also have the ability to contact the previous franchisees and interview them. Find out why they are no longer a franchisee. Did they sell for a profit or did they close due to failure?

5. The FDD is too complicated and just full of legal jargon:

The FDD is not full of legal jargon but should be reviewed by your attorney if you are close to signing the documents. The FDD will have the list of all franchisees, existing and previous owners with addresses and phone numbers. It will also contain any legal disputes. The FDD will tell you everything that is expected of the franchisee, including costs, royalties, length of contract, and expectations of the business operations.

6. Working without a competent franchise consultant:

A franchise consultant works with hundreds of companies versus a sales person the works with that specific company. This consultant should be unbiased and focus on your goals. A franchise consultant should only refer you to companies that you are qualified for; both financially and professionally. A franchise consultant should never pass your name or confidential information to a specific company without your agreement. A franchise consultant has your best interest in mind. They are the “matchmaker” and NOT the salesperson.

7. Focusing on the “Top Franchise” lists since they are the “best”:

The “best franchise” lists are offered in many publications. They are good to look at for ideas. Find out what makes these companies get on the “top” list. It is usually based on total sales or the most amount of franchised locations. Remember…..more is not necessarily better. The same validation still must take place, even if a company is listed on one of these lists. Some franchise companies choose to stay smaller and keep their existing franchisees very happy and financially healthy.

8. Not having enough working capital:

There is a reason the FDD will have the financial requirements listed. They need you to be successful in order for them to be successful. Do not go beyond your financial limit. A franchisor wants you to have enough capital to focus on growing your business. There is a start up period any company takes before it starts earning money. When doing your validation, find out what that specific company’s average start up (break even) time is prior to being profitable.

9. Not giving yourself enough time for the research and validation:

The beauty of a franchise is the fact that you have predictable results. If you do the proper research, the day you open the doors of your new business, you will know what to expect. Predictable results and expectations being met or exceeded are invaluable. You will have this with the correct research and validation time.

10. Not having an exit strategy:

The most successful entrepreneurs have an exit strategy. You may choose to be in this business for the next 20 years, but know your options regarding selling, transferring ownership to a family member, or other exit options.

As you probably realize, buying a franchise is a serious process. There is so much information available out there…..But, in the end, it can provide you with an opportunity to be in control of your future.

Owning your own franchise can be a great experience. There is also a high chance for success since the business is already established and there is a good support network for you to reach out too. Even though the franchise comes with many benefits and high chance for success, you the franchisee still determine the success of your franchise. You will still have to do work to be successful. One of the main ways to be successful is to have a high amount of business for your franchise. Here are a few ways you can boost your franchise’s business.

Hold an event: By holding some kind of event at your franchise business you will get more people in the doors of your franchise to see what you have to offer. Also if others will see it and be interested as to what you have inside.

Get involved in the community: Once you open a business in a community you become part of that community. People will want to see what you can do for them. Usually once they see that you are involved in their community somehow, they will support you as you support the community. Find a school or organization in your community that you can partner with, you would be surprised what it can do. You will also get free advertisement for your franchise as they tell who supported their efforts to crowds of people.

Advertise: Your franchisor may offer some for of advertising for you through your franchise contract. However, that may not be enough for you if you really want to boost your business. Some ways that you can try to advertise is on a billboard, get an ad in the newspaper (in an appropriate section), get a spot on a radio station, or make flyers to hand out or drop at peoples doors. You can also do a form of grassroots advertising where you get out directly to the people and give them a sample or demonstration of what you can do at your franchise. It is low cost and really gets the word out, but is must memorable if you want to keep it in the public’s heads!

Develop a good word of mouth reputation: It is extremely important and beneficial to develop a good word of mouth reputation for your franchise business. People talk about everything, especially experiences they have. You want people to be talking good about your franchise! I have learned that if someone experiences something good they tell a few people, however if they experience something bad they tell EVERYONE! So make sure that people only have good things to say about your franchise. Make sure to have good customer service and quality products, and the people will spread the word about your franchise for! Just remember this can work against you if you give them something bad to talk about.

So, use these few suggestion to boost your franchises business and make it more successful. You really have control of your own destiny!

Deciding to become a franchisee is a great path to start. There is much joy, excitement and rewards that come from owning and operating your own franchise. However, it is important to choose a great franchise to become a part of from the beginning. The options are endless as you first begin looking, so take your time and choose wisely. It is vital that you find a great franchise that you can be successful in but also that has a great TEAM to become a part of and join!

When you first begin looking for a franchise to invest in you may get a little overwhelmed. However, the first step you should take is to figure out what you want to do, what you want out of the experience and if you have the skills to be successful in the franchise. Since you will be investing your time and money into the franchise is it important you are doing something that you like. If you don’t like or are not interested in a particular type of franchise, move on! If you are interested in cars and auto body stuff, you would not choose a franchise in the food industry. Also make sure that you have an idea of what you want from the experience of becoming a franchisee. Make sure that they franchise you choose to become a part of will give you the best chance at achieve your own goals for your franchise business. Next, you need to have the skills or at least some of the skills that are needed to run the franchise. Keep in mind, just because you like the idea of something doesn’t mean you will be good at it. So, if you know nothing about repairing vehicles you may not want to jump into a franchise business that sole premise is to repair vehicles. You will be in over your head! So, make sure you find a franchise that works for you!

Also, it is important that you join a great franchise team! Most times franchises are more successful than independently opened small businesses. There are a few factors that make that happen. However, one of the most influential factors is that franchisee’s (those who open the new franchises) have the backing and support of the franchisor (the one who has already established the business and the name) supporting them. It is important that you find a franchise that has a great support system and a franchisor that is willing to help you through the process. Most franchisor’s offer continued support and training for the entire time you are a franchisee under them. This is something you should look for, since it will play a role in getting and keeping your franchise business successful!

So, if you are about to jump into the world of franchising take your time find the right franchise for you. Also make sure that you are joining a great franchise team who will be there to help you as you begin your career as a franchisee!

Joining the world of franchising can be exciting and frustrating at the same time. It is just one of those things where you are going to have ups and downs, but you will get through them. After all you would be not only managing the franchise but you also have ownership of the franchise business as well. Just remember that you have support teams in place and you can make more if you need. But, most importantly remember that franchises are more successful because of the franchisor support from above and it’s O.K to ask for help when you need it.

It is important to create support teams for your franchise from the beginning of your franchising career. This should start with your family. Be sure that you have the support of your family as you embark on such a great opportunity for you and your family. Your family will and can be your biggest supporters! When things get going a little hard or you need a little encouragement don’t forget that they are there to help you and bring you right back up!

Also you should have a great support network through your franchise! A major reason why franchises are more successful than independently started businesses is because they are already established businesses. Your franchisor has most likely already worked out or been through some of the bumps along the way. So, if you are in need of assistance, you should contact your franchisor for help. That is what they are there for. You are paying a certain amount of money to have their support when you need it, so use it! Usually you will find that they have been in the business long enough and have encountered a similar problem that you are going through, so they will be able to offer great assistance to you when you need it.

Also, you may even want to establish a support network with other franchisee’s within your franchise. It is always nice to have someone to relate to who is in the same shoes or at least similar shoes as you! It is ok to have other franchisees to bounce ideas, thoughts and problems off of. You would be surprised how helpful this may be. You may also have a franchise attorney who helps you through franchising processes. If you feel confident that they are the person you should call on for help, then you should.

Being a franchisee means that you have a lot of people to call on for support, much more than those who have chosen to open their own independent business. So, if you want to keep your franchise successful don’t be afraid to ask for help and call on those who you know will be there! There is no way for those in your support networks or franchisors to know that you have a problem or need help unless you ask for it! So, take advantage of being a franchisee and ask for help when you need it, it’s O.K!