Tweet

Franchisees and The 90 Day Window

Guest post by: Ed Teixeira

Article Overview: One thing I've learned after a long career in the franchise industry, is that there is approximately a 90 day period for an effective franchisee start-up. There are some exceptions to my 90 Day Window rule, however, in most cases it applies.

Franchisees and The 90 Day Window

One thing I've learned after a long career in the franchise industry, is that there is approximately a 90 day period for an effective franchisee start-up. There are some exceptions to my 90 Day Window rule, however, in most cases it applies. Importance of the 90 Day Window: Most franchisees don't have sufficent working capital to last beyond the first 6-9 months of their franchise operation. Even the investment schedule in Item 7 of the Franchise Disclosure Document uses a 3 month period in estimating additional working capital required by a new franchisee. The longer it takes a new franchise to get fully launched the easier for competitors to zero in. Without a fast start-up, a new franchisee can get disillusioned as they wait for new sales to come in. If sales dollars don't come in during the 90 Day Window the franchisee will get anxious as the business is "burning" cash. This could lead to the franchisee cutting back on payroll and advertising. The role of the franchisor during the 90 Day Window: Schedule and coordinate franchisee training so that after training the franchisee can hit the ground running Have a strategy and process that enables the franchisee to pre-launch certain sales activities before the franchise is operational Have ample supprt and assistance available for new franchisees during the 90 Day Window Its critical that new franchisees get off to a fast start. Most new franchisees have enough capital to fund the start-up and another 3-6 months of operation. Some franchisees will have less. Franchisors need to do all they can to enable a fast start for new franchisees during the first 90 days of their operation.

Related Articles
  Negotiating the Terms of Your Franchise Agreement
  Aid That Franchisors Provide to Franchisees
  6 Attributes of Franchise Systems Worth Investing In
  What makes a franchise successful?
  Short on time ... why not use a shortcut? - Todd Jamieson
  How You Can Discover Your “Daily Creativity Window”
  5 Great SBA Registry Franchises
  FRANCHISE - A PARTNERSHIP - YOU BET
  Ethical franchising
  Handling Explosive Growth
  Top Ten Questions To Ask When Exploring Franchises
  FranchisorFranchisee Relationship
  Biggest Issues Potential Franchisees Need To Consider
  How do you get a full email header ?
  The Laws of Franchising Remain Unchanged
  Summer’s Rising Temperatures are a Boon for Certain Franchises
  Evaluating the franchisor
  Many Franchisors Prefer Multi-Site Operators These Days
  Hottest Home Service Small Business Franchises
  The benefits of franchising

Article Tags: fast start, franchise industry, franchisee, franchisees



Related Forum Posts
Re: Quote of the Day - "Your most unhappy cust - And this is why we have windows 7 when a lot of customers were complaining about Window Vista
Re: Quote of the Day - "Just because something works doesn't mea - Good qoutes. Case study Microsoft Dos Microsoft Windows 1 very good Microsoft Window 3.0 Very good Microsoft Windows 95 Better Microsoft Windows 98 Better Microsoft Windows XP Better Microsoft Windows Vista Better Windows 7 Best More is still coming I used them all
Re: Fashion - Nana, At you choice you may choose to research the fashion industry a bit more. There is obviously a Business side to it as well as a creative side to it. Find out all the types of roles that exist in the industry. Some that come to mind merchandiser, Window dresser, floor plan organizer (someone needs to determine the layout of a retail store to best sell the goods), fashion consultant (Yorkdale mall has fashion consultants that take you around and tell you what looks great on you - you also get a cut from the sales). This is what I've observed from the business side, you may know more. All these roles I've written about will help you grow as a business person and make the contacts in the industry...possible stepping stones. But further more you'll also notice that you need to develop some business acumen possibly tailored to the fashion industry. When I was at Ryerson I knew I wanted to be an entrepreneur someday too. I knew I needed some basic business courses to get a foundation to build from. I was in a Tech/Business Major (I'm sure Fashion has something similar - Fashion/Business Major) and then started to create my own minor. Here are some of the courses I took: Marketing, Law, Entrepreneurial, Management, consulting.. and a few more . Also, I'm sure that within the Fashion Major there are also courses you have to take where you can use your creative side and create designs. Typically within a Major there are focuses you can choose - ask the program coordinator. Your next step is to do some research. 1. Visit Commercial retail outlets like H&M, Banana Republic, or jacob. Tell the Manager your doing some research for University and would like to know what types of Corporate roles exist aside from the roles on the retail floor (like sales associates). If she asks you to elaborate then you can use some of the roles I mentioned above. 2. With this information in hand you can visit the Ryerson Fashion department and inquire with the Program Coordinator on what focus within the Fashion Degree would help you the most. In my program there were 5 different focuses within the Tech/Business program. Just a quick aside. A good friend of mine too has a dream of fashion. he want to create a niche fashion line tailored to skinny men (I can't mention the style). He's in Business school but not in the Fashion program... He's in International Business but all his Minor courses are tailored to running a successful business ... similar to the ones I mentioned above for myself. I have no doubt in my mind he'll make it 'cos his vision is that strong.
Franchise Success Factors - Evan, I know it's been a while but maybe this will help: A great piece of information (academic research) that is important to all franchisors and franchisees is that of Scott Shane and Chester Spell who demonstrate that ¾ of all franchise systems fail within the first 12 years, and less than 1 in 4 survives until the end of the contract. Originally published in the Sloane Management review in 1998 the article is one of the more common sense pieces of writing covering the franchise industry. They identified a number of important franchise success factors that should be used to assess the likely success of a franchise system. They are: •Rapid growth (or planned rapid growth) of the franchise means that they can begin to reach a level to compete with existing players in the marketplace. •Local management support of the franchise aids rapid growth •Demonstrable trustworthiness and high quality systems They studied 157 companies in 27 industries and identified that one third of systems stop franchising in their first four years. They say “The high death rate of new systems suggests that franchising is not an easy business”. They developed a model called NewFran which points to the contributing factors of success: •A recognised successful history before franchising. This resulted in a recognised ‘brand name’ that could not be easily copied. Systems, marketing, premises e.t.c could be easily copied by competitors – a brand could not •Economies of scale i.e cheaper costs because they are larger, in marketing. This was achieved through being a bigger brand. •Rapid growth of the franchise allowed the brand name to develop quickly and stop competitors from copying or replicating the business idea. •Using local franchisees to use their local knowledge to determine local business decisions and operate with fewer ‘local field operations’. This means the franchise resources can be concentrated on branding, marketing and growth. The entrepreneurial ‘drive’ of the franchise owner is concentrated on building the business. The opposite of this is by keeping close control on local franchisees by appointing Master Franchisees. This was shown to develop ‘passive ownership’ which undermines the entrepreneurial incentives of outlet ownership. The said “therefore growing quickly, through master franchising, increases the probability of system failure” The article recommends some things off the back of this that seem to go against some of the ‘industry norms’ of franchising: •Franchisees should seek franchisors that are expanding rapidly. •Franchisees should not seek a franchise that promises a lot of field support •A lean operation at headquarters is a success predictor •Franchisees should seek franchisors with strong brands or at least a plan as to how they will develop a strong brand •Franchisees should be a member of a regulatory body •Franchisees should be wary of franchises that offer master franchising. Whilst this speeds growth it also increases the likelihood of failure. I would agree with all of the points raised and would like to just clarify that they suggest that in depth field support is bad – not in depth sales and marketing support. cheers


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Selling with Humor (and a Sorry Butt)

SEO and the Entrepreneur

Fighting the Saw-Tooth Affect

Suggestions

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.