The 5 Keys to Franchise Success

The 5 Keys to Franchise Success by Neil Burnard

Like any other business, reaching franchise success takes hard work, determination, and talent. It requires that you educate yourself on the numerous mistakes many franchisees have made in the past, so you don’t repeat them. It also requires things like adopting the right working habits, having the right attitude with the people surrounding you, setting up the right team, making the correct financial decisions, etc. The list of skills you will need to reach success can get overwhelming, but don’t stress out. I’ve compiled a list of the top five key factors you will undoubtedly need if you want to become a successful franchisee.

The Desire to Learn

The first step towards franchise success is truly understanding your franchise inside and out. While one of the huge benefits of buying into a franchise is the fact that you are handed a proven business model (meaning you don’t have to build one from the ground up), you still have to take the time to master the systems in place. You need to thoroughly understand your franchise agreement, all aspects of day-to-day operations, and how to enhance business while preserving the brand and your investment. The more ready you are to learn, the better able you will be to make your franchise as successful as possible.

Understanding your franchise will be an ongoing process. Agreements may be amended, managing positions may change, etc. One of the best way to stay current is to cultivate and preserve all communication with your franchisor. You should also communicate with your fellow franchisees because at the end of they day you are all representing the same brand and can learn a lot from one another.

Strong Work Ethic

When you’re part of a franchise, you’re selling the same products/services as every other franchise, so what’s going to make you stand out? Your work ethic.

Demonstrate your ability to get things done while minimizing costs and maximizing sales at your location. The hard work you put into getting your individual location off the ground will pay off for years to come.

Never assume that just because you are a franchisee of an established brand that money will come easy. You’re a business owner which means you’re responsible for not only yourself but your employees success. A little bit of your heart and soul should be invested in the business. Implement a solid work ethic that will naturally push the business and those around you forward.

Realistic Financials

As a franchisee, a major part of your job is to be on top of the finances. But before you even become an owner, you should take the time to analyze every aspect of what your initial investment will require.

Calculate how much you can realistically invest and how much you are willing to risk. Don’t let emotions and excitement get in the way. This has to be a completely rational decision. If you aren’t able to provide enough working capital to stay open, you might as well flush your money down the toilet right now. And don’t forget to consult your attorney and financial advisor before committing to anything.

As the company gets up and running, you’ll need approach your financials with the same stark objectivity. The the better grasp you have of your bank account and the actual cost of running your business, the better business decisions you will be able to make down the line.

A Solid Team

You might be the greatest business person in the world, but you’re also human which means you can’t do everything by yourself. In order to take your franchise to the next level, you will need the right team.

Don’t rush through this process. Recruit the best candidates, engage with them on a personal level, and make them feel valued. Keep in mind that these people can leave any time they want, so it’s important to be a good boss. As you build your team, you also will have to sustain and continuously engage them. Don’t allow employees to get stuck doing boring work, be fair, challenge them (in a healthy and acceptable manner, of course), and provide salary increases for a job well done, etc.

And remember, just because you’ve hired a great team doesn’t mean they won’t need franchising training. Take the time to train and develop your employees. With the right attention, they will not only get better at their jobs, but they will feel important to the business.

The Right Attitude

As a franchise owner, your team will ultimately look to you as their prime example. If you have a negative attitude, don’t be surprised if your employees catch it. And worse, don’t be surprised if that negative attitude eventually destroys your business.

Make it a conscious effort to adopt the right attitude both in and out of the office. While you’re in the office, be enthusiastic about business and your employees progress. Enthusiasm is contagious, and yours will make your employees excited to put in the work.

You’ll also want to implement the right attitude when you’re providing customer service. Letting your customers know they come first will be invaluable for your franchise to succeed.

Lastly, take time for yourself and your family. Spending quality time with the people you love will revitalize you. You will come back more determined and with a more positive outlook, hence continue to push your franchise business forward.

Final Thoughts

There you have it: five key factors that will guide you to franchise success. Keep in mind that a lot of this will depend on your commitment and mentality towards the business. If you truly want to see it flourish, you will find it in you to achieve your goals.

How to: Financing Your Franchise With Retirement Funds

How to- Financing Your Franchise With Retirement Funds by Neil Burnard

Seeking and obtaining financing for a franchise can feel like an uphill battle. In a volatile world economy, it’s even harder. Unfortunately financing options like standard bank loans, SBA loans, or even loans that are secured by equity (eg. your home) are sparse these days. So how are you supposed to finance your dream franchise?

There is one option people often overlook: you can use your retirement funds as your source of financing. Most people assume they should only use that money for it’s original intent (retirement), but using your retirement funds to finance your franchise can help you escape massive debt and high interest rates. It can actually be a wise decision, so long as you educate yourself on what’s the best way to go about using these funds.

There are two main ways you can source money from your retirement account. Depending on what country you’re living in, the particulars can vary slightly. Take the US for example: the first and simplest approach is to borrow the money from your 401(k). Depending on what kind of account you have set up, you can borrow up to 50% of your total amount or $50,000, whichever is less. Keep in mind that with this approach you will have to set up a repayment plan with interest for your 401(k) and rules and regulations will vary according to your plan provider.

The second, but more complicated, way for you to tap into your retirement funds is with the Rollovers as Business Startups (ROBS) approach. This plan allows you to open your company, set up a retirement account within you new business, and then move your existing retirement funds into that new retirement plan. After that, you are basically free to direct and use the funds in the retirement account as you see fit.

Just some of the advantages the ROBS approach are:

  • Control: Because you are not subjected to typical restrictions other financing approaches may impose on you, you will have the ability to use the money when, where, and how you want without having to worry about extensive paperwork or delays.
  • Minimal fees: Usually, you will not have to deal with any transactional or asset-based fees once you redirect your retirement plan. This translates into saving a good amount of money that otherwise would be spent on traditional fees and commission expenses associated with traditional financing plans.
  • Diversification of investment: Because you don’t have any restrictions limiting you on how you can invest, you can invest anywhere. Consider investing in stock and bond mutual funds, other business opportunities, real estate, etc.

Additional pros:

  • It doesn’t involve any usual limitations and repayment requirements associated with a standard loan from your 401(k).
  • It can be used with an IRA account.

The greatest thing about the ROBS approach is that ultimately you’re the one making all the investment decisions. You’re not tied to some individual or entity that chooses for you the fate of your company. But again, when it comes to financing your franchise, it’s important you fully educate yourself before you start making any financial decisions. This list of advantages should serve you as a guide, but ultimately you will need to figure out what’s best for your individual circumstance and your franchise dreams.

Other countries will have different retirement plans/codes as well as their own regulations, so look into every option that is open to you before making your final decision.

High Cost vs Low Cost Franchises

High Cost vs Low Cost Franchises by Neil BurnardWhen deciding on what franchise to invest in, a big factor can be the cost to invest. Some franchises cost under £20,000, while others can be upwards of £75,000 or even more. For most people, that’s a difference significant enough to seriously limit their options or at least make them think twice before jumping in to an otherwise amazing sounding business. There are some key differences to keep in mind when deciding, so here is a quick run down of what to expect.

Low Cost Franchises

At the lower end, it’s important to understand that while the entry cost will probably cover what you need to get started, like supplies, initial training, etc, it will not include working capital, which you will need until your business gains enough momentum to start turning some of its own positive cash flow. Before you buy in, make sure you know exactly what is and is not included in the cost. If you bought into a less expensive franchise because of your own financial constraints, unforeseen costs early on could be a make it or break it moment for your business before you’ve even had the chance to take off.

You will also need to make sure your personal expenses are covered for a few months, at least. If you’ve run the numbers, and you’re going to run out of your own funds after a month, it’s time to look into different options or wait until you’ve saved up a larger nest egg. Learning to budget in general is going to be key, but remember, it’s one thing to hold off on buying a new luxury car, it’s another to try to hold off on paying rent.

Depending on what the franchise provides, you may also want to have some extra cash set aside for things like sales and marketing. However, many franchises will include this as well. That’s why it’s important to understand exactly what you’re getting.

The good news is that when you’re buying into a franchise, you’re buying into a business that has been thoroughly tested. Your franchisor should be able to tell you exactly what to expect, your fellow franchisees will be a community you can draw tips and lessons from, and ongoing training is a great wait to develop your business as it grows and flourishes.

Lower cost franchises often fall into the sales or marketing industry because the marketplace is big, the startup costs are low, and the potential for growth is always there. This means you’ll probably want to be comfortable selling, talking on the phone, and working fairly independently. You may not even need to employ staff for awhile.

High Cost Franchises

Higher cost franchises get their cost because they usually require things like premises to operate, special equipment, branded decor, and more (a great example is a fitness club.) There’s a lot more training required for things like operational systems and the hiring, training, and development of your staff. The setup process also takes much longer.

Higher cost franchises usually need the help of bank loans and overdrafts, so that cost will need to be incorporated into your business plan. The good news is that with approved franchises, banks will often lend up to 70% of the total cost of setting up. Even better, these loans will usually come with repayment and interest rates that reflect the approval ratings of the franchisor, which means you get a great deal directly because of the prior success of the franchise you’ve just bought into.

One thing to keep in mind is that with more staff comes more managerial responsibilities. If you’re not the type of personality that enjoys managing or being responsible for the well-being and success of others, you might end up disliking a big part of your job.

Conclusion

With so many great franchise opportunities available, the biggest factor in predicting your success has more to do with finding the franchise that’s right for you. Be as candid with yourself as possible about your limitations, concerns, fears, and deal breakers. Weight your options carefully, and make a pro’s and con’s list (because there will be pro’s and con’s to every situation.) Take the time to find the right franchise for you.

Is My Business Ready to Franchise?

Is My Business Ready to Franchise?

Franchising can seem like the perfect way to expand your business. In the franchise world, franchisees are the ones financially responsible for opening the locations and running them according to the franchisor’s regulations. Because franchisees make a big investment to get started, they are highly motivated to drive their businesses towards success. Sounds great, right?

Although it may sound like franchising your business would be an ideal plan, not all businesses are meant to be franchised. Here are four basic questions you can ask yourself before determining if your business is ready to be franchised:

1. Have you perfected your business model?

The first step to determining whether a business is ready for franchise is making sure the business model is both thorough and successful. You must be able to show and prove a successful business prototype that demonstrates a strong unit performance and consumer acceptance. Moreover, the business must be operated by an owner who shows great ability and leadership skills, ensuring that he or she will be able to take on the heavy responsibility entailed in any business expansion.

2. Can you sell it?

Not only does the business model need to work, it also must also be attractive to potential investors. Some of the typical factors that franchisees take into consideration before investing are business credibility, success rate, uniqueness, and how “hot” or innovative it will be in any given market.

3. Can you duplicate it?

One of the key factors in a franchisor’s success is being able to clone or replicate the business easily. If the original business only works because of an exceptional employee or a one of a kind location, franchising will not work. A franchise concept should be straightforward in order to guarantee it will work in different markets and will be simple to operate. When it comes to franchises, simpler is often better.

4. Can you provide franchisees with an adequate return?

Franchisees expect to get two kinds of returns: one, for the time they spend working at the actual business, and two, for the investment they made when they bought the franchise. So you need to ask yourself: will your business model be able to provide these kinds of returns to the franchisee while also providing you the royalty you’re supposed to collect as the franchisor? If your answer is “no,” you will have to go back to the drawing board. Research how you can improve your business model, so you can meet those returns. If you can’t, your business might be better off the way it is and not a great fit for a franchise.

Conclusion

Franchising your business can mean quick, lucrative expansion for your business, but not if your business isn’t fit to be a franchise. Ask yourself these questions to figure out if your business can fulfill these requirements.

The First 3 Questions You Should Ask Yourself to Determine if Franchising is Right For You

The First 3 Questions You Should Ask Yourself to Determine if Franchising is Right For You

So you’re interested in owning a business, but you don’t know if franchising is right for you. Franchises can be a great business to enter into because they operate under one successful trademark and can generally achieve more than what individual business people can. But the fact that franchises may have a better or quicker success rate than independent businesses is not the only factor you should consider when contemplating whether or not to buy into a franchise. Here’s a list of three key questions you should ask yourself before making your final decision:

1. Can you afford the franchise?

Before asking yourself any other question, ask yourself if you can realistically afford the startup costs of the franchise plus any further costs you accumulate before you hit profitability. Even though the franchisor can give you an idea of what the initial costs will be, actual costs always vary depending on the needs of the business. You need to have enough capital to not only open the franchise, but also run it until it is profitable and stable. For some businesses, this might take one year, for others more, and others less. So plan your finances as accurately as possible, ideally overestimating your expenses to limit your risk of under capitalization. This will greatly diminish your risk of failure.

2. Will you enjoy the franchise?

A lot of times, people may be interested in a franchise simply because of the potential capital they can generate. While a business’s success rate should be something you’re concerned with, it should not be the only reason you picked that franchise. Running a franchise is no easy task; it will undoubtedly pose many challenges, and you should anticipate working in it for the next 10-15 years (at least.) So if you’re planning on owning a franchise, make sure you’re interested in the industry and think you can enjoy the day-to-day work entailed in that specific business.

Aside from liking the particular industry, product, or service the franchise is involved in, also make sure you like the franchisor’s staff. These are the people you will be constantly contacting for support and advice, so make sure you feel comfortable working with them as you will be working with them for a long time. If the relationship sours, you could end up regretting your decision.

3. Does the franchisor and existing franchisees you are considering have a track record of success?

So you made sure you have the right amount of capital to invest in a franchise, and you picked out a franchise in an industry you are interested in, but did you research that particular franchise’s success rate? It is very important to do research, not only regarding the franchisor’s level of success, but also the individual franchisees record of success.

If the franchisor is successful but the franchisees seem to be going downhill, what does that mean? What if it’s the other way around? You want to make sure you invest in a franchise where the franchisor offers enough guidance and support to help your franchise soar. Obtaining this information can better help you project what your success rate will be and in the end, if your investment will be worth its value.

Conclusion

There are many other considerations that will go into your final decision, but these essential questions will help you determine if you’re ready to take the next steps towards becoming a franchisee.