FRANCHISING Finding the Right Fit

Transcription

1 FRANCHISING Finding the Right Fit Prepared by:

2 Ready to Ride? It s commonly said that franchising is like entrepreneurship with training wheels. With a replicable business model, smart hiring choices and a solid financial backing, there s a very high chance of doing well. Even still, innumerable people have failed in running a franchise. Even a bike with training wheels will get nowhere without someone who knows how to pedal. Franchising has been studied and documented countless times. It s what qualifies someone to be an effective franchisee that is hazier. As you consider stepping into the world of franchising, use this guide to help find the right fit for you. STEP ONE: Self-Assessment The entrepreneurial world is broad, vast and full of possibilities. Franchising, however, is a much narrower field of entrepreneurship that not all entrepreneurs are cut out for. While most entrepreneurs seek to be movers and shakers in their given industry, franchisees seek to replicate an existing business model. The first step in determining the best fit for you in the world of franchising is to make sure that franchising is for you at all. Traits of a Great Entrepreneur Trailblazer Rule breaker Has fresh ideas for products and business practices Collaborative Creative Go-getter Motivated and motivational Passionate Visionary Flexible Financially savvy Strong leader Traits of a Great Franchisee Manager Rule-follower Has consistent business practices and trust in provided plans Authoritative Diplomatic Where do you fall on the entrepreneurial spectrum? 2

3 STEP TWO: Picking a Path The beauty of franchising is that there are thousands of franchise opportunities in countless industries. From food and beverage to fitness to car maintenance, you have your pick of business types. There is a series of considerations to make before determining the direction you d like to go. Consider the Product While examining franchise options, you firstly want to consider what it is that each company offers. The product or service should be something that you are familiar with, appreciative of and willing to base your life around. Someone who is a vegetarian, for example, would be much better suited to run a smoothie franchise than a burger joint. Assess what industries interest you and what products you would be willing and proud to stamp your name on. Consider the Industry Once you ve narrowed down your options by interest, it s important to assess the local market for your remaining options. If you ve determined that investing in a pet grooming franchise would be most interesting to you, you ll want to do a little research on: the success of pet grooming businesses in your country overall; the success of and demand for pet grooming business in your area; and the existence and success of competition in your area. Be sure to find a balance here a market that is saturated with competition may be too risky to enter, but a market with zero competition may indicate a lack of need for that particular business type. Consider the Job Description With innumerable options for business ownership come innumerable options for hours and responsibilities. Make a list of goals for your franchising career that considers what you want your everyday to look like, and align that list with a list of franchising options that match. Determining where you want your career to go can help you narrow down the options to the ones that will take you there. Consider the Business Model In addition to your personal career goals, you want to consider your business goals and choose a franchise that lines up with them. Your choice may vary according to your personal ROI goals and adherence to the franchise s business plan. If a franchise offers you a flimsy, half-completed business plan, you can count on having very little support from the corporate office and, as a result, very little profit. STEP THREE: Picking a Location The location decision for a new franchise can make or break your venture. Location will determine the type and amount of patronage your business will receive, which will in turn heavily affect your bottom line. In considering your location options, it s important to ask yourself a number of questions before making any decisions. Who? First, you want to determine the who of your business. Who makes up your potential customer base? Now, think about the who of your potential location. Who lives and shops in this area? Making sure your who s line up will help you maximize the consumer potential of your chosen location. 3

4 What? The next question to ask yourself is: What type of area is your location in? You want to be sure that the surrounding area is conducive for your type of business. Consider the surrounding businesses, parking options and overall aesthetic. Where? Similarly, you want to consider where the location is positioned. Is it easily accessible? If it s a storefront location, can it be spotted from main roads? If it s a shopping center location, is it in an area with heavy foot traffic? Even the best business model can be crushed by a lack of public visibility. When? Another important factor to consider when choosing a location is time. Signing a lease is just the first of many things that have to happen to prepare a location for your business s official opening. Why? After going through an in-depth evaluation of the who, what, where and when of a location, it s important to take a step back and ask yourself the one reason why this location would be the right fit. If you find yourself struggling for a great answer, move on. If you can t choose between several benefits, there s a much better chance that this is the location for you. How? Once you ve settled on the fact that this location will work for you, it s time to determine how you can capitalize on this location. Consider the overall picture the who, what, why, where, when and why and brainstorm how you can take advantage of each component of your evaluation from a marketing standpoint. How will you best reach the who of this area? How can you engage in cross-promotion with surrounding companies? If your list of ideas comes up short in this step of the evaluation, it s possible that you haven t quite found the right fit. STEP FOUR: Doing Your Homework Now that you ve determined that you have the right personality, franchise and location, it s time to do a little research to prepare yourself. The following are just a few of the many subject matters you ll want to delve into before buying your franchise: General business practices Having an overall understanding of the business world will be invaluable to your franchise endeavor. Oftentimes, local colleges and universities will allow you sit-in or audit their business classes. Some colleges even provide free business courses online. We highly recommend: Two Reasons Companies Can Fail, taught by Bill Gross, Stanford University Entrepreneurial Marketing, taught by Jin Gyo Kim, Massachusetts Institute of Technology (MIT) Building a Business, taught by Constantin Coussios, University of Oxford There are also countless pieces of business literature to help you get a grasp on the business world from the comfort of your reading chair. Check out: The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, by James Surowieki The World is Flat, by Thomas L. Friedman The E-Myth Revisited: Why Most Small Businesses Don t Work and What to Do About It, by Michael E. Gerber Competing for the Future, by Gary Hamel and CK Prahalad Good to Great: Why Some Companies Make the Leap and Others Don t, by Jim Collins In Search of Excellence: Lessons from America s Best-Run Companies, by Thomas J. Peters and Robert H. Waterman, Jr. 4

5 Life in the Franchise Industry You can take this research in any direction you have available. The most important thing to do is talk to people who have worked in franchising. Talk to those who have succeeded and those who have failed; seek out articles detailing the good, bad and ugly of the industry. Be prepared for anything that can come your way. Above all, get used to the idea that franchising is not a get rich quick scheme. It will take work, time and effort. Benefits will only come to those who truly deserve them. Power to Pedal! Once you determine your personality type, industry, location and conduct your research, you re ready to get going! Just remember even the best bikers fall sometimes. The trail will be rocky from time to time, but you re now a seasoned cyclist with the tools to avoid the worst obstacles and, most importantly, pick yourself up from a crash. Specific Franchise Model Lastly, make sure you know your franchiser s business model inside and out. Understanding why this franchise model works and how to operate it yourself will help you formulate a plan of attack as you head in. Great American Cookie wishes you sweet success in your franchising venture! 1346 Oakbrook Drive, Suite 170, Norcross, GA franchiseinfo@gfgmanagement.com This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of or want to locate a franchise in one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your state. Franchise offerings are made by Franchise Disclosure Document only.