The Five Whys Of Franchising
26 Aug 2020 - CEO of Dudan Partners, a published author, Forbes contributor, speaker, YPO Member, founder and consultant to emerging brands.
It’s no secret that events as of late have inflicted massive damage on the global economy. Individuals facing unemployment through no fault of their own are now looking for a way to take control of their own lives, and I believe franchising can be the perfect avenue to do so.
As a franchise executive and CEO of a company that provides franchise consulting services, I’ve found that franchising provides unique opportunities for personal, economic and career development. The five most important of these are:
• Life transitions
• Entrepreneurial education
No matter what industry you are in, equity is one of the most valuable assets you can acquire.
When you buy a franchise, you are paying the franchisor for the right to operate a well-developed and tested business model under an established and recognizable brand name. While there may be royalties and other fees associated with the operation of the business, you are still the business owner. This means that you own the business. And in most franchise models, you will be able to sell the business and turn your equity into real dollars.
As a franchise owner, you are your own boss. Once you invest in a concept and become a franchisee, nobody can fire you from that position so long as you remain compliant with the franchise agreement.
For many people, this is the most attractive part of becoming a franchise owner. Some franchisees I work with come to me frustrated with their experience in the corporate world, whether it be that they were let go after years at a company, are frustrated with the lack of upward ascension or dealt with a number of other issues. Taking the leap to become a franchise owner means that you can take your life into your own hands and decrease the number of uncontrollables.
Becoming a business owner through franchising is a strong method for solving financial problems.
Maybe you have a couple of kids who need college funds. Maybe you’re trying to plan for a happy and secure retirement. No matter the situation, with the right franchise model, opening a franchise with a tried-and-true business model can provide you with quicker and larger returns than many salaried jobs or opening a de novo business from the ground up.
As many franchisees have found out, the more effort you put into your franchise, the larger the return you can earn. Work hard and you’ll find that your goals are much more achievable than you may have thought.
Maybe your desire for change isn’t due to economic issues or job instability. Perhaps you’re exploring franchising because you’re bored with your job or position in life. Franchising is often a lower-risk investment that allows you to expand your business horizons while taking your life into your own hands.
One of the many great things about franchising is that you can buy a franchise in virtually any industry. If you’re passionate about fitness, you can invest in a gym concept and become your own gym owner. If you’re passionate about animals, you can invest in a dog-training concept and work with animals as a business owner. From hair cuts to environmental services to restaurants, there is a concept out there to suit your interests.
While there are many differences between starting your own business and owning a franchise, becoming a franchisee is a very good way to learn about how to start and run a business while decreasing the risk of failure.
You can learn how to calculate start-up costs, market to a certain demographic, sell your service or product, manage a number of employees and learn about finance, accounting and insurance.
Plus, as a franchisee, you have the opportunity to understand what it takes to franchise a concept. You can use this franchisee experience as a stepping stone to starting your own concept — and perhaps franchising it yourself one day.
Getting involved in franchising is a great way to become an entrepreneur and take control of your own life. If you are frustrated with the corporate world and itching for personal, economic or career development, franchising just may be the answer.
Choosing The Right Franchise
So you decided that franchising sounds like the next big step. How do you choose the right franchise for your needs?
The first step is to identify the outcomes that are important to you. Are you looking for immediate cash flow, or are you willing to invest longer to ultimately get a larger return or build greater equity? Do you have specific financial goals, such as paying for a college education or retirement? Do you want to use a business to relocate? Are you looking for a business you can expand to multiple locations, or do you desire to operate one? How long is your commitment? Is there a certain industry you are passionate about and want to use franchising as a tool to get into?
The next step is to be clear about your role in the franchise business. Do you want a model that you have to constantly be hands-on with, or are you looking for more of a passive investment? Is this a sales or operationally focused business? Do you want to deal directly with the public or customers?
Once you have answered these questions, you should then consider the amount of risk you are willing to take on in terms of your financial capacity and willingness to invest.
Lastly, and perhaps most importantly, you should consider the experience and sustainability of the franchisor. Who are the leaders behind the franchise? How much experience do the leaders or does the company have in franchising? Do they have a good reputation in the franchise industry?
Answer these questions and you’ll be on your way to freedom through entrepreneurship and financial happiness via franchising.