Michael White, President of Venture X and Chief Development Officer of United Franchise Group, dispels some common misconceptions about the skills and costs involved with becoming a franchisee.
Many people are intrigued about franchising but may be hesitant to find out more about how it can represent a very rewarding and satisfying long-term opportunity.
“Franchising hesitancy” can be caused by different reasons. One misconception about franchising is that you need a certain type of business experience, such as retail — you don’t. All you need is an ability to trust and follow the process.
Another fear factor is that opening a franchise requires the investment of a king’s ransom — not necessarily true. While some large franchise brands do require a hefty investment, there are many that have lower barriers to entry; some of them have financing available through corporate partners.
In addition, often potential franchisees are under the misconception that they need to be world experts or industry gurus in a given subject area — not true. Skills and experience are largely transferrable.
Sometimes prospective franchise operators believe that they need a four-year college degree, possibly in a very narrowly focused field, in order to be properly prepared — that’s not necessarily correct either. Once again, being able to follow a system is more important as a predictor of success.
There are, in fact, a number of advantages to becoming a franchisee, starting with the fact that the system and model have been already validated.
1. Proven system
A successful franchise brand is, first and foremost, a pre-validated business operating system that has been developed and standardized by the franchisor to maximize the franchisees’ ability to run a successful operation. This means you don’t have to develop hiring requirements, training processes, or sales protocols. In fact, depending on the brand and parent company, a franchisee could be stepping into a turnkey business operation as franchisees are typically provided with (or have access to) standardized equipment, supplies, and an advertising plan — the foundation to open and operate a franchise.
2. Proven branded model
Being part of a pre-existing, well-known brand is another powerful reason why franchising is worth a look. Franchisees are able to tap into the power of a recognized brand, and the backing of a parent organization that offers training, support, marketing resources and more. While franchisors cannot provide everything, they do provide a cumulative body of experience and wisdom. This knowledge is vital to running a successful business — much easier than building from scratch. Bottom line: franchisees are given the tools and infrastructure needed to grow and succeed within a branded model.
3. Built-in support
If you’re an independent business owner, you’re totally on your own. As a franchisee, however, you’ll receive training and assistance with getting your business established, plus ongoing support and guidance from your franchisor. You’ll also be part of a peer group of other franchisees who know precisely what you’re experiencing as a new owner, and will be able to take advantage of corporate-level resources, such as marketing and IT.
4. Buying power
These resources are not available to solo owners of brand-new businesses, as their buying power is quite limited. As a franchisee, on the other hand, one can tap into lower prices for equipment, supplies and services negotiated by the franchisor, which can include special promotions for customers and negotiated rates with preferred vendors.
5. Brand recognition
Small businesses have to build both their brand and customer base from the ground up, which is very time-consuming and can be fraught with risk. Franchises, however, are recognized businesses with established customer bases baked in. So, when you open a franchise with a well-known brand, people automatically know what your business is, what you provide and what they can expect. Plus, buying into an established franchise system offers you the power of immediate brand recognition, which could take years to develop if you own a standalone business.
Tips for Selecting a Franchise
We now know some of the most important advantages associated with franchising, but budding entrepreneurs often wonder which type of franchise to open.
Think about what you are passionate about. People interested in sales, accounting, management, and marketing all make great franchisees – particularly in the coworking and flex office space. Don’t let concern over what you’re not good at discourage you from researching franchise concepts!
Do your due diligence. Insist on speaking to current franchise owners to get their perspective on how the concept works in communities similar to yours. If the franchisor offers you a chance to attend a “Discovery Day” tour, do it! This will help you determine if you mesh with the corporate team.
Go through the franchise disclosure document (FDD) to get a better understanding of the franchise concept.
Does the franchisor provide information in the “Item 19” of their FDD? Prospective franchisees often find it helpful to have sales, revenue, and other benchmarks to consider as they research each concept.
Meshing a nationally recognized brand with local management and ownership provides great value for franchisees and franchisors, while retaining the special feel and “vibe” that a community business provides.
A franchise business might be just the path you seek.
Written by Michael White, President of Venture X and Chief Development Officer of United Franchise Group. If you’re interested in owning or converting your space to a Venture X, visit the website today to learn more.