Franchise Blog

The worldwide popularity and success of Starbucks coffee products, has led many an entrepreneur in search of a lucrative opportunity. Strangely enough, though, Starbucks do not offer any franchise opportunity. Not locally or internationally.

Selling franchises has never been part of the Starbucks group’s business strategy, and apparently there are currently no plans to change that in the future. There is, however, an opportunity available for business owners in those areas where Starbucks cannot acquire land, or do not plan to expand to. When analyzing the license agreement from Starbucks, “franchise” is not quite the business model it describes. The company licenses the use of its “image”, including the logo, the equipment used, and the interior layout resembling that of an original Starbucks shop.

The Starbucks “franchise” agreement is not for everyone, though. It is aimed at high traffic locations, like hospitals, airports, and grocery stores, to ensure good returns for both parties. A number of factors are taken into consideration, including the background and capabilities of the person filing the application, the location, and the available down payment against the loan taken (as an indication of expected stability).

Although what many people call the Starbucks “franchise”, is not really a franchise, it is till a lucrative, solid business opportunity. If you want to add to your existing business, and offer more value to your existing customers, it might just be a viable option for you. If, however, you are looking for a more “traditional” franchise, you may want to pass up in this, and look further.

The main advantage of buying a franchise is the reduced risk of failure. When thinking about starting a business, entrepreneurs always seems to compare buying a franchise to and independent start-up. That is a mistake.

Depending on which study is being quoted, and which timeframe is being analyzed, the numbers are staggering in favor of Franchising. The numbers show more than a 90% survival rate after five years for Franchisees versus in the range of 20% for stand-alone start-ups.

As you can see, comparing franchising to and independent business is like comparing apples to oranges. Unless you are furiously independent and self-confident entrepreneur and have a unique idea which consumes your life or have an abundant expertise in a specific area, franchising is always a safer way to go.

The key to the success of the franchise model is the support and collaboration of the proven system. Business is always about building a system and franchising offers the most efficient way of delivering business systems to anyone who wants to be in business for him (her) self.

If a candidate talks to ten franchise companies they will hear a saying being repeated that in franchising “you are in business for yourself without being by yourself.” The saying, and franchising in general, provides a sort of comfort level not available to an independent entrepreneur.

Being independent may provide a great degree of freedom, but may also provide a share of confusion, second guessing, increased costs and a feeling of going alone against the world.

In the end, I would never discourage anyone form starting an independent business. At one point in time, I was faced with that decision myself and realize that each person has their own set of circumstances that come in play. However, I would discourage anyone from simply comparing franchising to starting an independent business. Comparing different franchises to each other is another story.

Why re-invent the wheel when looking to open up your own small business, when franchising opportunities can allow you to branch out with business that has proven itself capable of bringing in a profit? Deciding which business to join as a franchise partner is a very large decision. The key is to find a successful business in a market that is likely to thrive, even in the midst of our currently turbulent economy. Hollywood Video franchising offers small business owners a piece of a very lucrative multimedia pie. It does not matter if your young, old, rich, poor, educated, and uneducated, no matter what socioeconomic background a person comes from, everyone likes to settle in and watch a good movie. Hollywood Video provides customers with newly released films at a reasonable rental rate, so they can enjoy viewing in the comfort of their own homes. There are three significant reasons to consider opening a franchise of this company, which has recently decided to expand.

An Enduring Market

Hollywood Video franchising invites new owners into a winner’s circle that has proven itself able to stay at the head of the home video rental race for the long haul. Hollywood video currently has a presence in 47 states, as well as the District of Columbia. With over 2,000 stores nationwide, Hollywood Video has proven its ability to press past mere existence and has managed to thrive. With the recent increase of a price of a movie theatre ticket, the general population has turned to video rentals as their primary source of film viewing entertainment. This turning ensures a steady stream of customers on weekdays as well as weekend nights. Hollywood Video has its finger to the pulse of this modern culture and offers their customers at rentals, which cost less and are rented out for longer periods than most other rental chains. This has given Hollywood Video significant favor in a competitive market, and it ensures the warm reception of a new Hollywood Video franchise in many wide-ranging locations.

Straightforward Business Structure

If you are looking into Hollywood Video Franchising possibilities, you will be spared the over-complicated proposals of lesser businesses who do not understand the need for an easily duplicated and straightforward plan of action. While quite successful, Hollywood Video operates within a very simple business structure. Even an owner who is new to the business world will be able to grasp both the initial business establishment plan as well as the day-to-day procedures involved with running a successful Hollywood Video.

An easily Liquidated Product

Hollywood Video Franchising has an added benefit over other franchise opportunities. To put it simply, used DVD’s and video games are very easy to sell. Hollywood video has taken good advantage of this truth, stocking the store with large quantities of newly released or endearingly popular films. When the popularity of any given movie wanes, the video store simply takes the excess rental stock and puts it out for sale to its customers. This means that each franchise owner will not only profit from rental returns and late fees, but will also be able to liquidate easily any product that is not providing the rental return you desire.

The key to buying a franchise is the process of Due Diligence. This is true for both, the Franchisor and the potential franchisee. This is the process majority of candidates often overlook.

Buying a franchise is different from buying almost anything else, even from buying an existing independent business. The key to due diligence in the process is the Franchise Disclosure Document (FDD), earnings claims (if available) and the ability to speak to current and former franchises.

Speaking to the current franchises is especially important. A solid franchise or a savvy franchise consultant can provide you with a number of tips on how to go about finding the best information. Often, potential candidates say that they are not comfortable in asking the tough questions. They don’t want to “bother” people in finding out the intricacies of financials and all the details on operations. This sentiment is understandable, but in order to make the right choice when buying a franchise you have to get as much detail from the franchisees in the system as possible.

During the process of due diligence I recommend organizing the data collected. The best way to do this is to build a spreadsheet to track all the variables of the business. Each franchise the candidate will talk to will have specific circumstances which apply to their particular situation. However, with proper preparation, after speaking to 5, 10 or even 20 franchisees, similarities will emerge and all the process will start to make sense.

At the same time, in addition to learning more about the franchise company, the candidate will gain the understanding of the numbers and operations of a franchisor which will come very handy when putting together a business plan, applying to financing or verifying your findings with your accountant.

Keep in mind that during this process, the franchisor will also perform due diligence on their candidate. The best companies don’t sell their concept to just anyone. They have a lot at stake in bringing in the right people and will invest significant resources to minimize their risk. Successful franchise systems will offer their business model only if they think that the candidate fits their profile.

In the end, due diligence is the key to finding the right franchise business. It takes time and effort, and the majority of people who want to buy a franchise have no experience in doing it. However, if the potential franchisee has a plan and is well prepared and organized, doing due diligence will help avoid costly mistakes.

Those who are contemplating starting a business by buying a franchise or partnering with a company via purchasing a license agreement or through some other means are probably finding it very difficult and very time consuming to do all the research required to gather all of the information needed to make an educated decision. In fact, the truth of the matter is that if you’ve never ventured down this road before, you have no idea the plethora of information and steps you must take to ensure that you

1.) Buy the franchise that is a good fit for you,
2.) Don’t over pay for the franchise you purchase,
3.) Don’t buy into a scam,
4.) Don’t buy a job when what you really want a business,
5.) Understand the difference between a job and a business,
6.) Understand the pros and cons to investing via a franchise versus starting a business of your own with your own brand name,
7.) Do a thorough and preliminary check of the franchise financial statements,
8.) Know the right question to ask the franchisor and its franchisee/members,
9.) Understand what’s in the UFOC,
10.) Know the difference between a franchise and a business opportunity,
11.) Understand what most franchise consultant will do for you and what they want do, and the list goes on.

There is an old saying that the purchase of a home is the most important purchase and decision you will ever make in your life. However, if you decide to venture into business by purchasing a franchise, the investment you will make in terms of time and money makes such a business investment decision far greater in importance than buying a home. In fact, if you invest in the wrong franchise or sign a bad contract, you could find yourself losing your home and much more!

The term franchise was already employed in the Middle Ages, referring to authorizations or privileges as sovereign granted in favor of any citizen in relation to certain commercial activities, or fishing and exploitation of forest resources. The origin of the word franchise, is from the term “franc,” during the Middle Ages it was implemented as proposed above; in fact the first document reflecting the granting of a franchise is dated in March 1232, and was awarded in French locality of Chambey.

Franchising is a strategic business model that allows the use and transfer of technology in production and marketing of goods and services, besides simplifying access to the consumer branded products recognized at affordable prices, to develop and expand successful businesses in global markets.

In recent years, franchises in its various forms have stimulated the growth of world economy; its successful transformation process has become modest businesses in large-scale organizations that benefit from the know-how in standardized production processes, quality and service.

Because the “franchise” as a form of conservancy, steadily and increasingly have the increased presence in everyday activities we do (for example, we can eat “KFC,” enjoy a hamburger in “Bemba,” buy clothes in “BENETTON’S” or ask for a pizza at home to “Domino’s”) which is something natural in our activities, is no less true that they all represent and express widely known franchises operating in the world, and are a small show that extent and scope of the commercial formula that is its realization.

The model franchise for business development is consistent with government policies, aimed at promoting innovative projects that help create new job opportunities, bring new technologies and offer the national consumer products are marketed in other countries within the processes globalization and free trade treaties.

According to estimates by the U.S. Department of Commerce, at the end of this century 50 percent of retail sales will be handled within the system of franchises.

In recent years the system of franchising businesses reached an explosive development thanks to the globalization of economic life of nations aimed at increasing openness in this process of transformation of capitalism.

According to the administration of small businesses in the United States, franchising has several advantages over independent retailers, they are:

Reputation: It is a licensing system established and well known, the new concessionaire does not have to work to establish the reputation of the firm. The product or service being offered is already accepted by the public.

Working Capital: It costs less money to operate a business concession, because the franchisor gives the concessionaire good inventory controls and other ways to reduce costs. When necessary, the franchisor can also provide financial assistance for operating expenses.

Experience: The advice given by the franchisors offset the inexperience of the new owner.

Managerial assistance: The owner of a small independent store has to learn everything, and experienced a retailer cannot be a master in all aspects of finance, statistics, marketing and sales promotion. The best franchise companies give the dealer continued assistance in these areas.

Useful: By assuming some reasonable costs and franchise agreements on supplies, the concessionaire can usually expect a reasonable profit margin, because the business is handled with the efficiency of a chain.

Motivation: Because the franchisee and the franchisor benefit from the success of the operation, both have a vested interest in the business. Franchising is the best kept secret of the 21st Century!

Blair Cavagrotti is in Marketing at WorldFranchising.com, a website that provides franchise information to potential franchise buyers.

Do you enjoy helping senior citizens? Are you interested in running your own health care staffing franchise? There are many great companies that will help you to start your own company. Just imagine being able to help patients get the proper health care that they need. There is story after story of senior citizens being abused by bad health care. You can be a part of the change, by running your own health care staffing franchise. Here are 5 great opportunities for you to consider.

1. Bright Star Healthcare

The need for quality people to get involved in running their own heath care staffing franchise is growing every day. Bright Star Healthcare is quickly becoming a leader in the health care business and is actively looking for people who genuinely care about patients. A background in healthcare is not required, as they will train you in how to run your franchise in an effective and profitable manner.

2. Interim Healthcare Staffing

Interim Healthcare offers you the opportunity to choose from 3 different franchise plans, depending on what you are comfortable with. If you want to be involved in providing personal care, but do not desire to be involved with medical care, they have a program for you. If you want to be involved with in-home medical care or medical staffing services, Interim has designed a franchise plan for you as well.

3. Start Med Staffing

Based in Cleveland, Oh., Start Med has over 50 franchises across the United States. They are dedicated to providing the best for their patients and have designed a training and support plan that reflects that attitude. Their trainers are professionals in the field of health and medical care which will not only insure you are prepared to run the business properly, but Start Med will also give you the tools you need to make a good income.

4. Home Health Mates

With more than 20 years experience, Home Health Mates has gained a great reputation as a leader in home health care. You will receive extensive ongoing training and regular updates on changes and procedures in the staffing industry. Home Health Mates wants to see you succeed in your new business. They offer one of the lowest franchise fees in the industry.

5. Right-at-Home, Inc.

With over 150 franchises already, Right-at-Home is seeking people who desire to own their own business. Opportunities are available across the United States. You will receive two weeks of training at the company headquarters in Omaha, NE. and full support as you continue to build your business. With more and more people requiring health care, the demand for a quality health care staffing franchise will only continue to increase. If this sounds like your kind of business, give them a call.

The Search is On

In these days of cutbacks, downsizing, and layoffs, many people are looking for alternative ways to earn an income. When reviewing those alternatives, the subject of franchises will invariably come up. After all, it seems to be the perfect answer – a way to own a part of America. A way to have your very own business and not have to create it from scratch. With a franchise business, the identity of the company is already established. Sometimes, as in the case of large franchises such as McDonald’s, Taco Bell, and Pizza Hut, it is established world-wide. Corporate support is available and the marketing system is in place. The variety of franchise opportunities is vast, ranging from advertising, to elder care, to mail centers, to hotels, to restaurants, to car washes, to cleaning and maintenance. In almost any area of business, there is probably a franchise in place to represent it.

Is There a Franchise Downside?

There’s no doubt that franchises make a huge impact on the economics of our nation. They provide millions of jobs and provide billions of dollars in payrolls. However, is there a downside to owning a franchise? Is this the best route for you to take?

Here are a few points to remember about owning your own franchise business:

* Most franchises cost tens of thousands of dollars to acquire. It may take anywhere from 3 to 5 years to operate in the black.
* Even though you own the business, you answer to the franchiser. They rule and what they say goes.
* Royalties are paid to the franchiser regardless of whether or not your business is making a profit at the time. You are paying for the right to use the name and the system. (This is required even if the company does not deliver what they promised.)
* Some franchises require that you pay into an ongoing advertising fund – since national and international advertising may be involved.

· For the most part, you must follow company procedures. If you are the type of person who wants to create your own systems, set your own rules, and shape a company into your own vision, then you may not be suited to be a franchise owner.
· Your franchise agreement can be terminated at any time for any reason, in which case the original investment could be lost.
· You may have to work a shift or two yourself, if your minimum wage employees fail to show up.

Is There an Online Business Upside?

While this type of commitment may be perfect for you, the question remains, why settle for a small percentage of the income from a franchise when you can operate an online business and have it all? The advantages of an online business include:

· Small initial outlay (miniscule in comparison with a franchise)
· Which means – no ongoing massive indebtedness
· No high-percentage royalties to pay
· No headache of hiring and firing employees (and keeping them working)
· No demand to be at the place of business
· Perpetual, passive income with a smaller amount of time investment
· Freedom to exercise your own business judgment
· Can be operated from any location – as long as you have Internet connection

It’s a Big Step

Moving into an alternative way of earning your livelihood is a big step. It requires a great deal of research and soul searching. Perhaps you’d never thought that any Internet business opportunity could actually bring in enough income to support you and your family. That’s true if you are looking only at products or services that bring in nickels and dimes. However, if you set about to find the opportunity that offers a tried and tested system, a successful mentor, online marketing support and high-ticket items to promote, then you have a real winner. When you find that just-right combination, you can kiss the idea of a franchise good-bye forever!

There is little doubt that buying a business franchise involves a making a big commitment both financially and in terms of the amount of work that it involves. For this reason it is important that people thinking about investing in a franchise take their time in considering the options. If you are investigating a franchise opportunity these are some of the questions you should ask.

What type of franchise is being sold?

Since there are several different types of franchise systems in the UK the first question to ask is what type of franchise is being offered. Probably the most widely known kind of franchise is the business format franchise. Business format franchises involve a broad relationship between the franchise and franchiser. In this type of franchise the franchisee receives assistance with some or all aspects of running the business. Other types of franchise include manufacturing franchises and basic product franchises.

How many franchisees does the company have?

Before investing in a particular franchise it is useful to know how many franchisees the company currently has. A large number of franchisees indicate that the company is successful and well established. However this may not always be a positive factor. A high number of franchisees may mean that the market has become saturated and that there is a reduced opportunity for profit. Similarly prime market locations may already be occupied. Newer franchises that have not yet had time to become established may offer a better long term investment.

How high is the franchise fee?

Most if not all business franchises will require franchisees to contribute an initial investment fee. The size of this franchise fee will vary between companies. If you have a limited budget then the choice of available franchise opportunities will clearly be narrowed down to those you can afford. Many franchisees will take out a loan to help them with their investment.

How much support and training is provided?

Many franchisers will offer training and support to their franchisees to assist them with running their business. The actual amount and quality of support offered will vary between franchisers and so it is important that you investigate just what you will be getting for your money. If you have had little previous experience of managing a business then it is beneficial to choose a franchise that provides a lot of help to its franchisees.

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” per 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 search, 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, 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 that 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.

Most economists do not expect the U.S. economy will go through a depression related to the credit-crisis-mortgage-meltdown-bailout bonanza. However, a recession appears to be a certainty.

At a time like this, not many people may feel like it’s a good time to start their own business. However, many of them may not have a choice. Indeed, a recession spells bad news for employees in the corporate America. Recent surveys show that a large number of corporations plan to lay off workers in the next 12 months.

This economic situation creates an opportunity for workers who are laid off or who do not wish to end up in that situation to start their own business. Buying a franchise may be the safest way to do that. Despite the economic ups and downs thee are several franchise sectors that are, if not recession proof, then recession resistant.

Here’s a look at franchise sectors with particular resilience:

Tax and Accounting Services: Death and taxes are a certainty and bad economic times increase desire to wisely account for every last dollar.

Education: Even in the current slowdown, parents desire a better future for their kids and are still will to invest in it.

Entertainment: As an example, during the Great Depression, the movie industry boomed as people craved escapism and had time to burn. That would very likely be the same today for film and as well as other inexpensive entertainment options.

Home, car, commercial, and industrial repair: In a bad economy, the rule is – don’t replace, repair. It doesn’t just go for you and your 12-year-old sedan or your leaky toilet. In a recession, consumers and businesses will more often opt to repair than replace.

Senior services: There’s a wide range of industries and fields that will most likely continue to benefit from baby boomers getting older, including senior housing, home retrofitting, geriatric care management.

Temporary Employment Services: In a shaky economy, companies often opt to hire someone on a part time basis instead of increasing their permanent payroll and benefits budgets.

Hair Care: With many hair care franchises available, competition is fierce. However, regardless of the economy people still need their hair cut.

In addition to that, there are always low cost franchise options available in other industries. In a down economy people will always be looking to cut their expenses, from phone services to gym memberships.

Payment Processing History:

In 1841, the new Province of Canada declared that its dollar was equal to one-tenth the gold Eagle coin which was 10 U.S. dollar and was worth 5 s. (5 shillings) in local currency. Hand-to-hand exchange of money was always required.

In 1914 (73 years later) A Union company from the West had begun issuing charge cards to its frequent customers. Charge cards (known as credit cards today) became more popular by the 1920s, specifically to sell fuel to a growing number of automobile owners.

In 1938 several companies started to accept each other’s cards. This allowed electronic dealings, but was very limited and had many security flaws. Move forward another 56 years the “Debit/Bank” card was introduced.

Since its national launch in 1994, Interac Direct Payment has become so widespread that, as of 2001, more transactions in Canada were completed using debit cards than cash. This popularity may be partially attributable to two main factors: the convenience of not having to carry cash, and the availability of automated bank machines (ABMs) and Direct Payment merchants on the network. This method is more secured and convenient for all…what else could be better?

In 1998 the Canadian government deregulated the payment (Visa, MasterCard, Amex, Debit) processing industry. This allowed independent company to enter the very lucrative world of banking. We also call this industry a “penny” industry due to the fact that for every penny processed the (your) business makes money.

Now, in January 2009, Canadians will have yet another new “SMART” technology that is much more advanced and secure than any other form of payment…M-Commerce (or Mobile Commerce) or SelfBank.

M-Commerce will provide the freedom for anyone to use their cellular or mobile phone to become a walking virtual ATM and/or storefront to transact business. Everyone will be free from the physical locations of banks and ATMs; your mobile phone makes sense when you’re on the go and busy with your everyday life! Anywhere and anytime you can send, buy, and pay online wirelessly to anyone, anywhere. No more paying exuberant fees to transfer money worldwide! No more waiting 24 hours for your funds! No more trying to find the closest bank in order to take out money! Now, all you need is your mobile phone!

If you are interested in starting a business, I would quickly join the ranks of many smart entrepeneurs who are making this type of franchise opportunity a high priority on their list! To add, due to the technology being so new, there are many advantages to start this type of business…the start-up cost in most cases is very low and the growth potential is vast! Talk about being at the right place at the right time!