January 11, 2010

If you’ve chosen the right franchise for you, (which means your choice was based on what you feel is a nice match for your strengths, combined with enough market research to know that it has a reasonably good chance to succeed in your region) then being the actual owner of this franchise should be a fairly simple proposition. Why would you want to complicate it? You’re investing in a franchise because;

• You want to have more control in your professional life
• You want a business of your own
• You wish to follow someone else’s business system
• You want to get to market quickly
• You don’t want to be alone in your venture
• You want to build equity

The actual business model of franchising is really simple. How simple?

From WikiPedia;

“Franchising is the practice of using another person's business model. The franchisor grants the independent operator the right to distribute its products, techniques, and trademarks for a percentage of gross monthly sales and a royalty fee. Various tangibles and intangibles such as national or international advertising, training, and other support services are commonly made available by the franchisor.” 

So, let’s say you have purchased the franchise of your dreams. Now what?

First of all, after your financing goes through, and you have found a suitable location for your business, you’ll be scheduled to attend the franchisors formal training program. You’ll probably travel to their headquarters, and spend anywhere for 3 days to two weeks there.  Here’s what you’ll do;

• You’ll go through the franchise operations manual
• You’ll learn how to use their technology
• You’ll learn how to hire employees
• You’ll learn about their marketing and advertising plans, and how to implement them
• You’ll learn how to sell your products/services
• You’ll  learn how to work with your businesses’ financial statements

You may work in a simulated franchise operation, or visit a local franchisee, and spend the day there.  Bottom line is that you will learn pretty much all you’ll need to run your new business on a daily basis. If your franchise will be having an official “grand opening,” you’ll tentatively schedule it, and learn how to make it a huge success.

So, when you invest in a franchise business of your own, you receive all the training and all the tools you’ll need to launch it. Usually, there are a couple of folks from headquarters on site for a few days when you finally do open your new business. They will help you work through any glitches you may be experiencing. (You will have glitches! Just because it’s a franchise, doesn’t mean everything’s going to be perfect.)

Do you see how simple this really is? You buy the franchise, you find a location, (Did I mention that the franchisor, in most cases, will help you find a great location?) you go through an in-depth, formal training process, you plan for your grand opening, and you…open! You’ve only had to figure out a relatively small amount of things necessary to get your new business launched during this entire process. (There is a lot to do on your end, but it’s a heck of a lot less than if you were preparing to launch a start-up business of your own.)

Now, I never said that all of this would be easy. It’s hard work, and you’ll be doing the work. The franchisor will be there for you a lot at the beginning, and less and less as you start evolving into a full-fledged small business owner. You’ll probably end up liking that part of it.

After all, you have a system to use. You have the necessary tools to use in your business. You have a marketing plan. You have support from the franchisor when needed. How simple is that?

* * * * *

Joel Libava, The Franchise King,® is the president of Franchise Selection Specialists Inc, a franchise consulting firm that specializes in helping prospective franchise owners all over the US find great opportunities in franchise ownership. Joel discusses all aspects of franchising on The Franchise King Blog, is quite active in social media, and serves as the community promotions director for Small Business Trends.

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Join the conversation ( 3 )

• Yonsal Ltd 1 year 10 months and 1 days ago

  

  Absolutely right but franchise system saves a man from heavy loss especially in the start of business. Suppose a person setup a brand new business, now he has to wait for marketing results and sometimes this wait can be very long, which is frustrating. While if you started a franchise, very next day business will be start just because franchising company already in the market and has good ratio of customers.Online Franchisingwww.yonsal.com

• Joel Libava 2 years 4 months and 11 days ago

  

  dM, Thank you for your comment. You are correct; The lack of control over the franchise system, and it's brand can be frustrating at times. For a true entrepreneur, the business model of franchising probably isn't right. The Burger King fiasco is being blown out of proportion. So, the franchisees will lose a few pennies on a cheeseburger. They'll also make money on the fries, and especially the soft drinks. I usually side with the little person-the franchisee. In this case, they are being short-sighted. It's about getting people in the door. If there are no customers, there's NO chance for any profit!Joel Libava

• DONNA JOHNSON 2 years 4 months and 13 days ago

  

  Joel: Great post! I've never owned a franchise. From the outside looking in, it seems to me that a successful franchisee needs to have a certain mindset. That is, they have to know that they will not have control over the brand, and the pricing.In terms of pricing, I'm thinking of the recent situation with Burger King. I've read in news reports that BK's $1 burger promotion designed to get customers to buy more hamburgers is causing franchisees to lose money. But since they don't control the price, they cannot do anything about it.Also, if a franchisee wants to collaborate with another small business owner on a project of some sort, they will normally not have control over how the brand name is used and/or displayed as a part of that project. That's fair, of course, but for an entrepreneur who has trouble with notion of not being able to control such things, I wonder if franchise ownership can be more inherently challenging.Would love your thoughts on that.Thanks again for a great post!dM