Franchise Advantages and Challenges
Franchise Advantages and Challenges
Advantages
A franchise system gives you the best of both worlds: established systems, purchasing power, and professional advice from those who have been through opening a unit on the one hand, and personal, local ownership that creates a bond with customers on the other (what Mom-and-Pops are known for).
Established Systems
An established concept gives you brand recognition and gives customers a level of comfort that they know what they can expect from your business. Franchises can, by and large, open for business sooner than an independent, who has to start from scratch, enabling you to begin recuperating your loans faster.
Purchasing Power
The benefits of the increased purchasing power you will enjoy through a franchise are straightforward. Spending less money increases your profit. You will enjoy lower overhead because you're essentially buying everything in bulk, from food products to kitchen appliances. And you won't spend money on things you don't need - the logistics and troubleshooting has been done for you.
Note that you may not realize the full benefits of bulk purchasing if you are the first unit in a new city or region. Distribution costs vary by region and, if you're the only unit, there are fewer economies of scale. Be sure to consult other franchisees regarding their experiences in this area.
Professional Advice
Plus, in a franchise system, there is no such thing as a first time task, because someone (a field rep, another franchisee, experienced vendors) has been through it before. So, if you need a special permit from the city in order to sell goods at a street festival, another franchisee can probably tell you which department to call, what to specifically ask for ("make sure to allow for a generator"), and what factors to avoid ("don't leave trash in the area - they are very strict"). Franchise support personnel share best practices among their store owners and serve as an information resource for system tools.
Other Advantages
Marketing
Marketing through advertising is rarely successful unless done on a large scale, targeting audiences via many venues and with tremendous frequency. This is impossibly expensive for a small business to achieve without economies of scale. Through the combined marketing fund your franchise manages you will get the benefits of name and brand recognition. It is up to you to make the most of the brand recognition by using local store marketing techniques to establish your location and reputation in your community. The combined efforts of your franchise advertising and your local marketing can be a powerful and lucrative combination.
Financing
It can be difficult for small businesses to acquire substantial financing to get a solid start. When you have the backing of a popular and proven franchise it can be easier to get sufficient funds at reasonable rates and schedules to get off on the right foot. While this also will depend on your business history and finance savvy, a big name and established concept can have the same beneficial impact on your financial backers as it will your customers.
Challenges
The challenges of being a franchisee often have to do with unreasonable expectations - you're not your own boss, the brand is your boss. If you want to serve beer (because your customers are asking for it), but the franchise has a policy against selling beer, you can't sell beer. Brand standards reach every part of your business, from uniforms and how they are worn to what types of coupons you can and cannot use. Know your tolerance for rule-following and look for a system that fits your comfort level.
Keep this in mind, even if you follow all brand standards, adhere to all franchise-prescribed processes, and cross all T's and dot all I's, other franchisees in your market may not - and this will affect your business. Franchisee inconsistency defeats the purpose of a franchise, whether it's your inconsistency or someone else's. You're only as strong as the weakest link.
Another thing to watch out for in a franchise system is relying too heavily on the parent company's services. You are one of many and the success or failure of your store is completely up to you. Know what services are guaranteed from the franchisor and be realistic about what you need to do in order to make your business a success. If you're waiting on a national ad campaign to drive your sales, you might be very disappointed in the results.
There are other issues too, which do not always affect all businesses, even within the same concept. Territory rights might make it impossible to obtain a great location, channel conflict (especially online or through grocery stores) can reduce demand at your physical location, and the use of only approved vendors ("I have a guy who can do this for less...") often are not thought of before signing the franchise agreement. Keeping all of these factors in mind while conducting franchise research and UFOC research will help you sign an agreement you can live with.
Every franchise system is different, as is every franchisee. Know what you're looking for, ask questions, and look for a system that fits with your goals and comfort levels.
Franchise Advantages and Challenges - To learn more about this author, visit Bob Richman's Website.
Like this article? Share it with your friends
There are advantages and challenges to nearly every business model. The key is to understand what they are and the impact they'll have on your business ahead of time so you know what to look out for. The idea here is not to scare you away from franchising. On the contrary, the more you know about the challenges involved the more likely you will be a successful franchisee.
Advantages
A franchise system gives you the best of both worlds: established systems, purchasing power, and professional advice from those who have been through opening a unit on the one hand, and personal, local ownership that creates a bond with customers on the other (what Mom-and-Pops are known for).
Established Systems
An established concept gives you brand recognition and gives customers a level of comfort that they know what they can expect from your business. Franchises can, by and large, open for business sooner than an independent, who has to start from scratch, enabling you to begin recuperating your loans faster.
Purchasing Power
The benefits of the increased purchasing power you will enjoy through a franchise are straightforward. Spending less money increases your profit. You will enjoy lower overhead because you're essentially buying everything in bulk, from food products to kitchen appliances. And you won't spend money on things you don't need - the logistics and troubleshooting has been done for you.
Note that you may not realize the full benefits of bulk purchasing if you are the first unit in a new city or region. Distribution costs vary by region and, if you're the only unit, there are fewer economies of scale. Be sure to consult other franchisees regarding their experiences in this area.
Professional Advice
Plus, in a franchise system, there is no such thing as a first time task, because someone (a field rep, another franchisee, experienced vendors) has been through it before. So, if you need a special permit from the city in order to sell goods at a street festival, another franchisee can probably tell you which department to call, what to specifically ask for ("make sure to allow for a generator"), and what factors to avoid ("don't leave trash in the area - they are very strict"). Franchise support personnel share best practices among their store owners and serve as an information resource for system tools.
Other Advantages
Marketing
Marketing through advertising is rarely successful unless done on a large scale, targeting audiences via many venues and with tremendous frequency. This is impossibly expensive for a small business to achieve without economies of scale. Through the combined marketing fund your franchise manages you will get the benefits of name and brand recognition. It is up to you to make the most of the brand recognition by using local store marketing techniques to establish your location and reputation in your community. The combined efforts of your franchise advertising and your local marketing can be a powerful and lucrative combination.
Financing
It can be difficult for small businesses to acquire substantial financing to get a solid start. When you have the backing of a popular and proven franchise it can be easier to get sufficient funds at reasonable rates and schedules to get off on the right foot. While this also will depend on your business history and finance savvy, a big name and established concept can have the same beneficial impact on your financial backers as it will your customers.
Challenges
The challenges of being a franchisee often have to do with unreasonable expectations - you're not your own boss, the brand is your boss. If you want to serve beer (because your customers are asking for it), but the franchise has a policy against selling beer, you can't sell beer. Brand standards reach every part of your business, from uniforms and how they are worn to what types of coupons you can and cannot use. Know your tolerance for rule-following and look for a system that fits your comfort level.
Keep this in mind, even if you follow all brand standards, adhere to all franchise-prescribed processes, and cross all T's and dot all I's, other franchisees in your market may not - and this will affect your business. Franchisee inconsistency defeats the purpose of a franchise, whether it's your inconsistency or someone else's. You're only as strong as the weakest link.
Another thing to watch out for in a franchise system is relying too heavily on the parent company's services. You are one of many and the success or failure of your store is completely up to you. Know what services are guaranteed from the franchisor and be realistic about what you need to do in order to make your business a success. If you're waiting on a national ad campaign to drive your sales, you might be very disappointed in the results.
There are other issues too, which do not always affect all businesses, even within the same concept. Territory rights might make it impossible to obtain a great location, channel conflict (especially online or through grocery stores) can reduce demand at your physical location, and the use of only approved vendors ("I have a guy who can do this for less...") often are not thought of before signing the franchise agreement. Keeping all of these factors in mind while conducting franchise research and UFOC research will help you sign an agreement you can live with.
Every franchise system is different, as is every franchisee. Know what you're looking for, ask questions, and look for a system that fits with your goals and comfort levels.
Franchise Advantages and Challenges - To learn more about this author, visit Bob Richman's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
|||
Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
|||
Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
|||
John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
|||
Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Bob's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
 |
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Strategic Planning Guide TeleSeminar Etiquette Making Networking Work 5 Step Action Plan Client-Attracting Web Copy |
|
 | ||
 |
Top 50 Social Media Blogs
Top 50 Social Media Blogs | |
 |
Top 50 Political Blogs
Top Political Blogs of 2009 | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
