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Benefits of Franchising Your Business

Benefits of Franchising Your Business

As an entrepreneur continues to grow their business, managing all aspects of the day to day business effectively quickly becomes a challenge.  Multiple locations of any enterprise involves many moving parts, all of which need to be monitored and maintained in order to sufficiently and successfully exercise a typical day of business.  Elements such as staffing, customer service, sales and brand continuity all become more and more difficult as   Growth can lead to unsustainability if not acted on properly.  Business owners frequently wish for expansion, but fear their ability to control each operational process will become muddled or lost altogether.  And, in most cases, they are probably right.  Many times, business owners who grow through company-owned and managed locations run into obstacles that hinder growth as the business expands beyond what they can manage directly.   

 

It is at this crossroad in a business’ growth that franchising becomes a viable expansion option.  Franchising your business allows you to multiply a brand’s footprint, but with added manpower and capital to scale the growth.  The value of having independent business owners who have money invested and their direct, onsite focus is enormous and the performance of franchise-owned and operated businesses almost always outperforms company-owned locations of the same business model.  Franchising your business can also reflect positively to the business’ image, as the public sees this new business as locally owned and operated and if the franchise owner is the right person they are connected to the community and know how to connect to consumers in the area. 

 

People are naturally attracted to familiarity, and a process that is consistent regardless of the location in which it is being executed will lead to successful results.  Franchising allows a brand to grow and duplicate at several levels.  At the national or global level, all franchisees and corporate units contribute to a marketing fund that is used to promote the brand and build awareness for the company.  At the regional level, franchisees work together through regional cooperatives where advertising dollars are spent in a region to build local awareness and leverage economies of scale in advertising and promotion spend.  At the local level, franchisees are required to spend dollars in promoting and advertising the business in their immediate market.  The combination of the advertising platforms maximizes the opportunity for brand development and makes franchising a win-win relationship between franchisor and franchisee.  

               

Franchising your business allows entrepreneurs to attract other like-minded people with a thirst for owning their own business, but with the desire to have guidance and support along the way.  Many do not want to endure the time, effort and risks inherent in starting a business from the ground up.  By purchasing and joining a franchise, franchisees are able to reduce the stress and increase the chances of success.  Franchising your business will naturally pool resources together – collaboration amongst franchisees leads to sharing of ideas and proper quality checking of each system and process.  A business owner benefits in having easy access to criticism in an appropriate and relevant manner.

               

The benefits of franchising your business can be extensive, but when it comes down to it, the key benefit is a transition from operational focus to strategic.  The entrepreneur who is able to make this transition stops focusing on the small items inherent in managing a business and begins to focus on what strategic aspects will help drive the growth of the brand and scale the business.  The funny thing about this transition is that people who are stuck in an operational mindset many times are busier and work harder than those who are strategic-minded.  Franchising is a big picture initiative where the product becomes the business model itself and with each transaction, the brand grows exponentially. 

 

For more information on the benefits of Franchising Your Business, Contact us:

info@FranchiseMarketingSystems.com

What is a Franchise?

What is a Franchise?

Whether you’re a new entrepreneur starting out or you’re already an investor looking for more opportunities, learning about a franchise is a great way to go. Maybe you’re wondering what a franchise is or how you get started in owning one. Learning what a franchise is can help you in determining whether you want to invest in a franchise or try to start something from the ground up. Here are a few tips on what a franchise actually is and why it is a great investment for your future.

A Franchise is a Proven Business Model

The franchise business is one that has a proven business model and a platform which can be leveraged by new franchisees. If a company is offering franchise options, it means the business model they have is successful and is making a profit for the company and hopefully, when given the same tools and resources, you as a franchisee can replicate their success in your own business. Those who do not have success in their business model typically do not franchise out. That would not be a wise choice for their company as franchising is merely the replication of a business model and operating system, remember the saying “Garbage In, Garbage Out?”. The franchise business model is one that is proven to work in a variety of markets and will be a profitable and successful business where it goes.

Marketing Systems and Business Development

A franchise also means there is a marketing and development system plan in place already that allows a new franchisee to ramp up their business and customer base in a shorter time period when compared with a new business start up. This model helps you to get the word out about your location in a way that is shown to draw in business. By working through the proven model, you can increase your customer base before you even open up your days. Marketing strategies that have been proven to work are already in place so you do not have to try to come up with your own. The brand image should be established, not necessarily with television or national exposure, but the brand should have logos, color schemes and overall branding already set and in place so that you have the tools and presentation needed to effectively begin your marketing and sales quickly upon starting the business.

Mentors and Network

When it comes to owning a business having a good franchise mentor in place is key to your success. Owning a franchise puts that mentor in place from the beginning and provides people who have been in your shoes and worked in the business model with enough time and experience to be able to provide value to you in what TO do and what NOT TO do. You can work with someone who understands the business, knows the ins and outs, and can assist you in all the bumps you may come across along the way. It also puts in place a readymade network of likeminded business people working together. Not only are you networked with great people, you’re working for yourself instead of for a boss. You can have your dream of owning your own business and being successful with a coach and mentor already in place.

Lower Risk

Starting your own business can bring about a variety of risks (a new business is generally in excess of 90% failure rate when compared to a franchise model which has an 80% or higher success rate). If you invest a lot of your own money into a model that is brand new, you may find yourself at a total loss if the business fails to take off. When you use that investment and buy a franchise, you will find yourself at a much lower risk of loss. The brand and the franchise itself is already proven to work so it’s a better investment for you. You’ll find your money is safer going into a franchise than if you were to try and develop a company, marketing plan, and business on your own.

 

So what is a franchise in the end? 

To sum it up, the best definition we’ve found is “entrepreneurship with a safety net,” we felt that this summed up the concept perfectly.  Franchising, when done right is a great combination of providing people with an investment opportunity to become a business owner without all of the risks, fears and anxiety around how to start the business effectively.  It is your business when you buy a franchise, but you have the guidance and support of an experienced partner in your franchisor. 

For more information on what is a franchise, contact us:

https://franchiseconduit.com/contact/

Franchising the First Five – How Franchise Your Business Model Early On

When you sell your first franchise, the initial development efforts typically consist of franchisees who wouldn’t necessarily make the cut later in your franchise system’s life cycle.  Mature franchise systems are much more aggressive and diligent as to who is allowed into the franchise network.  This isn’t necessarily a luxury that new franchisors can afford.  The largest single point of failure for a new franchisor is to not sell the initial five units who start to validate the business model and brand.  This puts a significant amount of pressure on new franchise systems to get these initial units sold and as a result typically the failure rate is higher for early stage franchisees.

  1. Who typically buys the first five franchises of a new franchisor? They usually are a bit more entrepreneurial then they probably ought to be. They are willing to take more of a risk and see longer term vision in the brand and the leadership of the franchise company. They want to negotiate the fees, territory and other material items in the franchise agreement. As a new franchisor, you need to be careful with who you sell these to, while not screening too hard, you also should be able to spot the landmines who really exhibit poor character traits for a franchisee. You also should be conscientious of how large and how exclusive you make territories as these early agreements sometimes become a thorn in growing franchisors sides as they gave away too much or were too generous with early franchisees.
  2. What kind of terms should be considered when negotiating a franchise agreement with early stage buyers? We have seen anything and everything negotiated in a franchise agreement, I wouldn’t rule out any possible terms as negotiating points if the buyer is right and the long term opportunity justifies the deal. Make sure that you get enough money up front and try not to touch royalty structures as the long term revenue stream will have an exponential impact to your bottom line and in most cases don’t make as significant of an impact in the negotiations of the franchise sale. Look first to initial franchise fee and territory size, most early stage franchisees will respond to these offers.
  3. How do you find the early stage franchise buyers? Most of the time, early franchise investors come from the same channels that the majority of franchise sales originate. We recommend the franchise lead portals (www.FranchiseConduit.com, www.BizBuySell.com, www.FranchiseDirect.com, etc), although they are not necessarily the best leads all the time, they are consistent and with the right sales process will produce sales for an early franchisor. Organic leads will many times play a large role in early franchise sales, pay attention to customers who ask about the franchise, leads that come in off your corporate site or referrals that come to you asking about franchises.
  4. Managing the franchise registration process while you sell your early franchises, you should be careful with managing the franchise regulatory process. First, you need to make sure that you have a good franchise attorney involved in your sales and transactions with each of your new sales and make sure that you have a solid franchise disclosure document (http://www.franchisemarketingsystems.com/franchise-disclosure-document-guide/). Cover yourself to make sure that the sales are managed appropriately and also that you are careful to manage the franchise registration process. We recommend limiting any communication with potential franchisees in franchise registration states as soon as you find out what states they are located in. Know the franchise registration states (http://www.franchisemarketingsystems.com/blog/franchise-state-registrations/) and understand that your franchise must be registered in these states prior to any marketing or sales activities taking place with a potential franchise buyer.

For more information on how to franchise your business and how to sell your first franchises, contact us:

info@FranchiseMarketingSystems.com