Is franchising right for you?

01/03/2018

Previously, we talked about the idea of owning a business and how it requires not only specific skills, but a particular mindset. If you’ve thoughtfully considered those qualities and recognized them in yourself, you still have some important decisions to make on your path to business ownership.

The most immediate one, is the business model. And the one in which I’ve spent most of my career, is the franchise model.

Like ownership in general, franchise ownership  is not for everybody. But again, those who flourish in a franchise setting report some of the highest levels of satisfaction among all entrepreneurs.

Franchise businesses operate in many sectors, but they have some common characteristics no matter where you’re listed in the yellow pages.

When you buy a franchise, usually you, as the franchisee, pay a fee to the franchisor. Most understand that a franchise usually comes with some territorial exclusivity, a logo and a core line-up of products or services.

But that’s really not what you’re paying for.

The two most important things you acquire in a franchise agreement are a brand and a system. These two elements are what give franchise businesses a distinct advantage over independent competitors.

The Brand

As part of a franchise network, you have the advantage of a name and reputation that already are known and respected by the community you serve. This is much more than standards for the logos and colors you use in your office or on your letterhead. A brand is a promise made to the families you serve. And an established brand brings with it the track record of consistently delivering on that promise with quality and responsiveness.

A respected brand removes many barriers in the beginning of a client relationship. It also carries with it a responsibility to uphold that promise in your business dealings and in your operations. This is the mutual accountability that you share with your fellow franchisees.

The brand also supports individual franchisees with national and/or cooperative advertising, brochures, templates and other materials that you can use to promote your business in the local community. This considerably reduces the continuing expenses of marketing your business and acquiring new customers or clients.

The System

One of the challenges of a start-up is developing and improving … and learning and improving again … all of the processes and policies that allow the business to run day-to-day. These standard operating procedures are what I mean by The System.

When you invest in a franchise business, the other key asset you’re acquiring is that system. This saves considerable time and expense in the early going, because you are using an established model. You also know that the national support team you’re working with is experienced in your specific business and has navigated the same challenges and complications many times before.

Additionally, you are gaining the insights of hundreds, sometimes thousands, of business owners in both nearby communities and across the country who have leveraged those processes to build and sustain growth over many years.

When you’re considering a franchise investment, it’s important to ask plenty of questions about the system. How is it different from other players in the industry? How often is it updated?

Having a solid understanding of the system, an appreciation for the experience of your peers, and being comfortable working within the process are, in my experience, early indicators of franchise success.

This is part of a series of posts on business ownership and franchising. I hope you find it useful and I’d be happy to respond to your thoughts or questions in the comments section of our Facebook community page.