Summary
You don’t necessarily need to come up with an entirely new concept or business model in order to be a highly effective entrepreneur. Many swear by the franchising model, in which you take on the challenges and opportunities of running a branch or multiple branches of an existing business.
A franchise offers a number of built-in advantages, such as joining an established brand that may not need as much explaining or marketing to reach your target audience. Be mindful, however, that franchising presents unique challenges of its own, in terms of running a business while still working within an existing corporate set of rules that you may have little or no control over.
Read on to learn more on what it takes to get started as a franchisee.
Transcript
Launching your own business is inherently risky. After all, it means coming up with a whole new idea from scratch and hoping that your market research can correctly predict some consumer interest.
Or does it? If you are interested in a proven, defined pathway to success, you could do worse that considering a franchising opportunity.
The benefits are clear. Rather than devising an entirely new concept that may prove to be untenable for the marketplace, you can learn from others’ experiences and drawn from best practices in opening a branch of an existing franchise.
A multi-location business can be said to evolve from a chain to a true franchise when it has established a unique brand identity that customers recognize and value as offering a particular type of experience that they want to seek out.
It is true that investing in a franchise business is inherently a very different proposition than starting an entirely new business on your own. It is indeed true that you may not come away with the same sense of satisfaction that accompanies launching your own venture based on an original concept. There may be a different sense of ownership at play, more tied to the specific location than to the underlying concept. But this doesn’t need to be an “either-or” concept – franchising could be just the opportunity you need to enter the entrepreneurship field and perhaps transition to other ventures down the line.
You have to admit that the idea holds a certain cache. You can tap into a large, successful business network by buying one shop, helping to get it off the ground, hiring the right management, and then letting it take care of itself. Spend some time now and then popping in to sample the food and make sure everything is on track. And then sit back and watch the rewards roll in.
The reality invariably takes quite a bit more work – and some risk as well. Part of that comes with the normal tendency to want to continue to grow and expand. Once you have a taste of success, it is very likely that you won’t be satisfied with just that and will be striving to build an even bigger network. Before you can even tell what happened, you may find yourself overseeing your own sprawling empire of yogurt or taco outlets.
The Ins and Outs
So why don’t more people get into this field?
One big obstacle is that the entrance fees can be very high. After all of the costs that it takes to launch, the profit that you see on your initial investment can turn out to be fairly small. The road to bankruptcy is littered with the aspirations of franchisees with visions of big returns that never quite materialized.
Long before you will ever get to a point in which you can play a more passive role in the business, you will be working very hard – probably far harder than if you simply worked for someone else. It will be hard to calculate the value of all of the hours you will spend getting the business off the ground, recruiting and training good people, and scouting out new market opportunities.
You will need to have a ruthless eye for cutting costs and a savvy sense for how to market and promote what you have to offer. While there are some inherent marketing advantages in franchises since you won’t need to sell an entirely new concept, you still need to make sure that you can establish a good reputation and differentiate your offerings from other competitors in the area. You also need to instill a sense of ownership and pride in the business into your partners and staff. If you are the only one invested in making the business a success, it simply won’t be sustainable over the long haul.
Keep in mind the fact that you uniquely cede some control as a participant in a franchise. You can’t control every decision or directive that is sent from corporate headquarters on branding and price, removing some of the autonomy that is so attractive about being a small business owner. You may find that the company-wide communications give you the same frustrations and anxiety that you would receive if you were an employee. Franchising truly is a unique role! There will indeed be plenty of rules that you need to follow – you can’t just throw the playbook out the window when you are a franchisee for McDonald’s or Burger King. Keep in mind that these rules are there for a specific reason – they help to maintain the consistent message and brand of the enterprise. This is why a franchisee must have a unique blend of personality traits – they must have the gumption and risk-taking tolerance to launch a business, but they also must be a team player willing to work within the existing parameters of a business that doesn’t offer complete freedom.
The Right Fit
As in any business, make sure you are playing to your strengths. Don’t blindly enter into an endeavor that you know little about or are uncomfortable with based solely on revenue projections. The best endeavors will fuse robust consumer demand, a well-established franchising apparatus, and your own genuine desire to grow in the business.
You will likely need to do a bit of work in order to assure the franchisors that you are a reliable and valuable partner. Franchisors want to ensure that they are working with individuals who are interested in sustaining the special sauce of the brand and honor the message of the business. You are well advised to thoroughly research every nook and cranny of the business in advance to demonstrate your commitment to being a part of the team. This will also help provide you some leverage when you enter into negotiations with the franchisor about the terms of the business proposition.
Financing the endeavor will require capital investments as in any small business. If you aren’t fortunate enough to be able to foot the costs yourself, you will need to ensure that you have access to a pool of investors or capital that can help you get the business off the ground. You may be tempted to turn to family and friends for loans first – just make sure that they understand the terms and the risks of the proposition they are entering. Even the biggest franchises out there see flops and closings. A familiar name on a sign is no assured guarantee of success. Ensure that you set expectations about the challenges and the timeline for seeing successful results upfront to those financing and working with you in launching the business.
What type of franchise would you want if you went down that road? What opportunities have you seen in your region for a pre-existing franchise that can come in and take advantage of palpable consumer desire?
Franchising can be a way to start a business with the best chance of making it. Is it for you? Consider checking it out.
You can also learn more by visiting my website: tonyneumeyer.com and registering to receive free trainings articles and more. Also subscribe to my YouTube channel and follow me on Facebook. You can get your copy of The 7 Minute Millionaire and check out my other books here: https://tonyneumeyer.com/books/.
