Why should I franchise?
Years ago my business partner asked why we had so many rules to follow as a franchisee. I explained, the best I could, that a franchise is a blueprint of a successful business. It's tried and true, all of the mistakes have been made and it's simply a matter of duplication or that particular product or service.
Fast forward 10 years that same partner calls me as he's opening up a new business and says, “ You know what? I sure wish I had that rule book to follow right now! Let me answer the question of why should I franchise ?
I think it's important to understand what a franchise is space and what a franchise is not . A franchise is a proven system that has been refined, can be duplicated, has all of the systems in place regarding marketing and operations, trademarks , short and long-term marketing plans with the support team to coach and assist along the way. The have standards and you are expected to adhere to them. However, some people want to reinvent the wheel.The wheel has been invented it just simply needs rolled forward and that speed is determined by you, the leader.
Once you have made the decision that you want to become a part of a franchise system e there are many categories and sectors to look into. I believe it's important that you take your personal experience and skill set and match it with the concept that you can make successful. Just because you like to eat in restaurants is not a good reason to buy a restaurant franchise.
There is alot to consider when buying a franchise. Things that you may not have thought of. How much do I need to invest, where do I get the money to inves,t who are going to be my employees, how many do I need, do you plan to commit full-time are you looking for something absentee (or something in the middle)? Will your household have any other income while you start up this new venture? Can I work from home, or do I need to lease retail space? By answering these questions you can help narrow down the categories that you would want to begin to investigate. Also you need to understand that a franchise contract is typically 10 years. If for some reason you choose to not continue to run that business it needs to be sold, you cannot simply close it.
You'll probably be surprised to learn that many services that you currently use or places that you frequent currently are franchises. The franchisor makes money by charging franchise fees, royalty and advertising payments in exchange for their business model to follow. there is also named recognition. I owned multiple Domino's Pizza franchises for 20 years. I'm pretty sure nobody would have called if it were Julie's Pizza. You pay them a percentage of your sales (not profits) to them weekly. There is typically an advertising fee. The franchisor has a vested interest in your success as the franchise publishes a document and (if they choose) reveal the earnings of each and every one of their current franchisees in order for a franchise to be
successful they need each franchisee to be successful within their system. Another thing is that the franchisor is getting into a partnership (typically 10 years) with you. They carefully select who they choose to award a territory. Again, the franchisor follows a very strict recipe for success as they need each and every franchisee within their system to be successful for their franchise system to work.
More questions about franchising can be sent to me at Julie@thefranchiseconsultingcompany.com . I offer a free service to assist in this most important decision of joining the millions that have chosen the path of business ownership and leave the Corporate world behind!
As a franchise consultant, I often have clients who fear the systems, procedures, rules, policies and procedures they have to adhere to as franchise owners equate to “Straitjackets” that stifle innovation and creativity.
While, yes, you do have to comply with the franchisor’s systems … for example, there are 3 pickles on the McDonald’s Big Mac, not 4, not 2 … but 3 and ONLY 3. But, franchises create systems from years of experience and trial and error. That’s one of the greatest reasons for investing in a franchise -- you don’t have to “invent the wheel” yourself.
That said, can you “make the wheel rounder?” The short answer is … absolutely!
Here’s the favorite example I share with my clients: to this day, the best-selling sandwich in the history of McDonald’s is the Big Mac.
The Big Mac was developed by a franchisee!
Cutting and pasting from Wikipedia, here’s a brief history of how this best-selling product came to be:
The Big Mac had two previous names, both of which failed in the marketplace: the Aristocrat, which consumers found difficult to pronounce and understand, and the Blue Ribbon Burger.
The third name, Big Mac, was created by a 21-year-old advertising secretary who worked at McDonald’s corporate headquarters.
The Big Mac proved popular, and it was added to the menu of all U.S. restaurants in 1968.
Even well-established franchises that have hundreds of franchisees and hundreds of units throughout the US, innovation is encouraged. The franchise companies realize they the great advantage of having many, many franchisees who are all working the same processes. With that many smart people operating the same businesses, some franchisees are inevitably going to find ways to accomplish procedures more efficiently and/or effectively.
Franchise companies embrace this fact and actually create venues to promote improvement and innovation.
Every well-developed franchise company eventually forms a franchise advisory council made up of franchisees from throughout the system. Franchise executives meet with their advisory councils typically each quarter and during these meetings, the executives report on progress from the past quarter and objectives for the next quarter and for the year. But they also use this forum to solicit input from the franchisees.
What’s working well? What’s not working well? How can we improve? What are the franchisees in the field saying? Are there better ways to accomplish what we do?
Even more, at just about every annual conference franchises in any industry conduct, typically each year, they present “round table sessions.” These sessions are usually conducted in large meeting rooms at the franchise convention hotels. In the rooms are a half-dozen or so 20-seat round tables and at each table sit franchise owners who have found a technique to accomplish the systems of the franchises more efficiently and/or effectively.
Franchisees attending the conventions move from table to table every 15 or 20 minutes or so at the sound of a bell in order to be able to learn from each of their fellow franchisees who are hosting round tables.
Franchise companies treasure such events because when a franchisee learns how to improve procedures, advertising, marketing, or operations from a fellow franchisee, the franchisees are quick to adopt the new methods.
No … franchising is not a “Straitjacket.”
There is plenty of room for innovation and improvement and many franchise owners enjoy helping the entire franchise system evolve, improve and thrive.
Who knows? After you invest in a franchise, you just might be the franchise owner who creates your franchise system’s “Big Mac!”
Dave Cooley, Franchise Consultant
Let’s learn more about franchising together.
Call me: 720.259.9475 (Denver – Mountain Time)