Own Your Own Franchise
On Monday evening at The Compass Group - a faith-based career networking group which I lead, we had Merri Cronk of FranNet. She brought us some great information on owning a business or franchise.
FRANCHISE
A franchise is a business system. Although the franchisee is the owner, he/she still needs to follow the franchise system and guidelines. This is different than traditional business ownership where the owner makes the rules. The traditional business owner may build the business from the ground up. A franchise has training, support, and guidelines on how to build the business.
IN or ON
A business owner may work IN the business by doing some or much of the work. A franchisee works mostly ON the business. That’s a huge distinction. If you are working IN the business, then you are creating for yourself a job where you are the boss. That may be perfect for some people. Many self-employed are IN business - lawyers, consultants, accountants, many physicians. Working ON the business - selling, marketing, operations, etc. - cannot be done as efficiently when the owner has to work IN the business. That is why many choose the franchise system instead of a traditional business.
FAIL
Fear of failure is the #1 barrier to getting started, but doing research on the business and avoiding these pitfalls can encourage success:
- Emotions for a product or service are main decision criteria. Merri tells of a handmade ice cream shop in her suburb that turned over ownership a few times. The product was good. The line was generally out the door. She caught up with one of the owners as they were selling, and asked why he was selling.
He said he bought the business because he and his family loved the ice cream. The place seemed like a lot of fun, but most of his staff were high school students. He spent far too many nights scooping ice cream when they didn’t show up for work - not to mention all the turnover. He had to do more human resources work than he had ever imagined. Another issue was that his product was perishable which was a challenge with inventory. He was working too hard, and wasn’t meeting his lifestyle or financial goals. He was working IN the business, and wasn’t able to work ON the business. - Choosing a franchise that you have industry experience. How could this be a pitfall? Well….the franchisee with industry experience may try to second guess the franchise system — or maybe they won’t trust it at all. Instead, Merri suggests to look at your transferable skills in sales, marketing, management, customer service, and/or operations.
Most successful franchisees were the people who knew what the business did for them - more money, more time, etc.
WHAT’S IT GOING TO COST ME?
Before the meeting began, I asked someone if they were planning to go into business for themselves. They said “it depends on the cost.” When you think of franchise, you probably think of hundreds or millions of dollars. In fact, most are below $100,000:
| Investment | % of Franchises |
|---|---|
| <$25,000 | 15.5% |
| $25,001-$50K | 13.1% |
| $50,001-$100K | 23.9% |
| $100,001-$250K | 9.2% |
| >$250,000 | 5.6% |
When considering options, look at business ownership as a possible pathway to success. Love your career - whether you are the boss, or you work for someone else.
There are plenty of resources on the web like: SCORE and The SBA, and books like “Bonds Franchise Guide” which can help the process. FranNet can help as well - and they don’t charge the shopper a fee!