Questions And Answers About Franchising

What can I do to prepare my business for franchising?

Though every business is different, the key to franchising is a good system of operation. This doesn't mean that you'll need volumes of employee handbooks before you're ready, though. In fact, most entrepreneurs take so much time fine-tuning their concept that they miss their window of opportunity - while others, in fact, do need work before launching a franchise program. Many can and do fine-tune their operations along the way, during the development stages. Familiarizing yourself with the franchise process in general and what role you are to play as well as the role of your key officers will be part of the initial preparation. Also, be prepared to identify the competitive edge your business enjoys to serve as a strong sales tool when presenting your opportunity to new franchise prospects. To get a professional assessment of your needs and what steps to take in preparation, you'll want to advance to the next step and register for your free, no obligation franchise consultation.

What is the main factor in being a successful franchisor?

Well the truth is... there are many. Some of which involve the initial concept of the business, operating procedures in place and the teamwork of the key personnel; not to mention financial stability of the company, product/service quality, return on investment ratio and of course the overall dedication of the key officers. However, as critical as all these elements are, the most important ingredient is your ability to teach someone how to operate all of the things that make your business successful, including the infusion of your company's culture, standards and beliefs. Your success in franchising is going to more rely upon your ability to be a great teacher than a great business owner.

Ask yourself these questions and see where you stand on these critical elements that will help you to successfully franchise.

• Can you teach someone your business?
• Do you motivate your staff / management on a consistent basis?
• Do you attest, develop and keep good people in your current operation?
• Does the quality of your operation remain high, even when you are not there?
• Have you developed a "culture" that makes your employees, and customers feel special about your business?
• Are you able to clearly translate your technology and procedures to others?
• Are you successful in providing constructive criticism that results in improvements in staff performance?

How vital is it that my business be unique?

Though it's nice to have carved a niche within your industry, if you have the other key elements in place, and a marketable advantage over your competitors, this is not essential. If this were the case, we would all see (1) ice-cream shop, (1) hamburger stand, (1) pizza parlor (1) hair grooming establishment and so on! If you feel you have a product or service that a reasonably intelligent person, properly trained, could open a branch in any variety of locations and make a decent living from - then chances are - you're franchisable!

*What are the advantages of trading revenue from company-owned units for the royalty revenue of franchises?

First, the reasons vary more than strictly revenue share. If you have the money to expand quickly through company-owned units and prefer to manage or oversee all locations yourself, then this may be the right choice for you. If not, franchising may be just what you're looking for. Franchising allows you to grow your company much faster than you would thru company-owned expansion. You collect the initial franchise fee and continuing royalties for the training and support you offer, while deferring the drain on capital of opening up additional locations- to your franchisees. As the franchisee now has a vested interest (unlike a manager) this ensures you have dedicated management in place at each location you open up. Other benefits you share in are the increased buying power you have now with your suppliers as well as increased name recognition through media exposure and drive-by franchise locations!

*(Though the revenue from franchise outlets is substantially lower than from company owned outlets, a higher percentage of the revenue is profit and that profit is generated with a much lower capital investment, therefore making your R.O.I. ratio much higher.)

This all sounds great, but how do I find the time to franchise when the pressure and demands of my business leave me little time?

This is certainly understandable. We know, as a business owner, the demands on your time are spread thin and even thinner as you start to open up more company-owned locations. However, this is the exact reason many business owners consider franchising! Once the franchise program is in place, which FranConsultant helps guide you through, your main job will be to oversee the franchise company. The franchisees are the ones performing all the time-consuming day-to-day tasks of business management so you don't have to.

How many franchises a year will I conceivably be able to sell?

Statistics show that on the average, new franchisors can sell up to 9 units the first year, up to 11 units in the second and up to 13 in the third. Of course this varies greatly by the type of franchise and its current demand as well as a number of contributing factors.

I'm having a hard time deciding whether I should open another company-owned unit or put that investment towards franchising. What do you suggest?

If you're really thinking of franchising as a possible growth option, consider this: for much less than the cost of opening one more unit, you can embark on a franchise development program. Within a year of selling franchises, you'll have multiple new franchise locations opening. You can then use this cash flow to open additional company-owned locations, or continue reinvesting this capital into additional sales and marketing efforts. Either way, you'll be opening multiple locations. If you had just opened a company–owned location during that same time frame, you would probably just be breaking even.

How will I be able to control and maintain the high standards of my business when franchising?

A misconception about franchising is that it lowers the level of quality in the business. While it is true that when a business grows, the business owner runs the risk that the new locations will not have the same standards of excellence as the original location. Business owners struggle with maintaining consistency among company-owned locations and rely heavily on managers to run their location in accordance with company policy. However the myth that franchising sacrifices quality is simply not true – in fact the opposite is more likely. Typically franchised operations outperform corporate locations. This is in part due to the fact that the franchisee is more motivated than any manager because the franchisee has invested his or her money to open and operate the business.

What guarantee do I have that my business will be a successful franchise?

There is no guarantee. But what guarantee did you have when you got into business in the first place that you'd be successful? However, the overwhelming odds of success are in your favor compared to the grim *statistics of independent business success. Franchising is simply a method of building upon existing success. Of key importance, of course, is a well-constructed franchise program that compares favorably with other franchises when prospects come to call. Prospective franchisees need to feel that you are credible and can assist them in being successful. They also need to feel that the qualifying process is a two-way street in which they are also being evaluated as to their credibility in making your franchise a success. This sends a message to them that you are interested in building a quality franchise operation with quality people and not just looking for mere numbers. No sooner will you turn away a prospective franchisee than when he suspects that anyone breathing and financially qualified will automatically be accepted into your system!

*For actual statistics on this topic, click here to visit our franchising facts page.

Links:

• What Is Franchising?
• Who Should Franchise?
• Benefits Of Franchising
• Franchising Facts
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• What Makes My Business Franchisable?
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