The academic year is coming to an end, and students at all levels are facing exams. Anyone thinking of becoming a franchisee should also stop and face an assessment: of themselves.
Starting and operating a business is a challenge, and it takes certain traits to succeed. Before you jump into judging and analysing franchises to buy, perhaps your own strengths and weaknesses need to be looked at first?
Consider the following seven, all of which are recognised success factors for franchising.
As a franchisee, you are likely to have dealings with three very important types of people: your franchisor, your customers and your employees.
The first is going to need a good-humoured partner who is willing to get on with the job without causing any bloody hassle. The franchise theory is based upon a strong, open relationship between the franchisor and franchisee, relying on two-way communication. Therefore you must be willing to keep in contact with and expect visits from your franchisor often, particularly at the beginning when the business is still being set up.
The other two relationships are also significant. A lot of franchises require customer interaction, often on a daily basis, and if your services are provided with charm and a smile then customers will return. It is important not to be shy – a franchisee is traditionally confident and outgoing, and this is necessary if you are going to be employing staff or dealing with the public. If you would prefer not to be in the public eye, it is advisable to choose a one-man-show such as an internet franchise, where you can work by yourself and feel more comfortable.
You will have to calculate the level of capital investment needed to buy a franchise, as well as other expenses such as loss of employee benefits and living in the initial non-profit phase for at least one year. By making a balance sheet of your liquid cash resources, assets and liabilities, you can see if you have the financial resources required. If the answer is 'no', it is necessary to work out how much you can afford to borrow. Banks often look favourably on established franchises and are more willing to lend to a proven brand and business model, but it is usually expected that you provide at least one third of the startup funds yourself.
A Passion for the Business
With 92% of franchise units in the UK reporting profit (NatWest bfa Franchise Survey 2013), franchising is the safest way to start your own business. However, it is not going to happen overnight. Hard work and self-motivation are still required before the benefits can be reaped, and it takes passion and dedication to keep this up. If you let things slip and the business fails, your franchisor will not be impressed.
Enthusiasm is also important for marketing. If you enjoy running the business and creating its products or services, then this will be evident to customers who too will be converted and come back for more. A positive attitude will inspire staff, make them more eager, and help you to get on with them.
Willing to Follow Rules
As a franchisee, you have to be a good student. Not only does this mean doing what you are told; you also have to be coachable and willing to learn. A secure business model is already established, and through your franchise contract you are legally bound to operate it as instructed.
This results in all fragments of your business – from packaging to accounting – being exactly the same as the franchisee's down the road. This setup guarantees that customers will always have a similar experience, whether in John O'Groats or Bournemouth.
The advantage of this is that you are promised support and guidance from other franchisees and from your franchisor as you follow a clear and proven business plan. The disadvantage is that if you feel there is a flaw in the system, you cannot just fix it. You must propose the change to your franchisor first, and wait for their decision.
Support from Your Family and Lifestyle
Setting up any business takes time and money, and it is essential that you have support from your family. Prepare them for the changes that are going to take place and make sure that they will be able to handle your higher level of absence, if it occurs. When your business is in its early pre-profit stage, it may be preferable for your partner to stay employed to ensure that the house has a steady source of income.
Becoming a franchisee means taking a moderate business risk and then dedicating years of your life to making it work. Franchising is most popular for people over 50 (NatWest bfa Franchise Survey 2013), and it is always necessary to consider if your age and health will allow you to run the business long enough to recover your investment in it.
Some franchises require you to work long hours – including weekends and holidays – especially in the beginning. If you have low energy then it may not be practical to try and keep this up for long. Instead, choose a franchise that allows you to operate part time.
Mental strength is just as important as physical. Running your own business comes with psychological pressures and you must be able to cope with stressful situations such as strong competition, teamwork, and sudden changes. When mistakes are made you need the resilience to recover quickly and remain optimistic.
Unless you have a clear vision of the business you are trying to build, you cannot hope to build it. Happily this is where franchises have the advantage: your long-term business plan and all your aims have already been set down in writing for you. Therefore as a franchisee you must be able to look at what you need to accomplish and decide how you are going to do it, converting it into short-term, every day goals. These goals have to be taken seriously – no procrastinating! You also need to have meetings with your employees to make sure they understand what these goals are and how everyone is going to work as a team to achieve them.