Look Both Ways Before Franchising
Look Both Ways Before Franchising
By Ed Teixeira
Frequently, I receive telephone calls and e-mails from existing business owners who are considering franchising their business. Some of these individuals share in the desire to do most of the franchising work themselves, whether due to a lack of capital or an unwillingness to spend the money. Some have gone so far as to try and write a franchise agreement. Although I applaud their enthusiasm and self-confidence, I must admit that this approach will typically lead to problems.
First of all, franchising involves a contractual relationship between the Franchisor and franchisee utilizing a number of complex documents, including the franchise agreement and disclosure document. The content and use of these documents must conform to regulations of the Federal Trade Commission and a number of State Agencies.
Failure to comply with Federal and certain State regulations can result in substantial fines or worse.
Secondly, having all of the franchise tools in place including, the most effective franchise terms, operations manual, marketing materials, website, franchise sales processes and how to deal with requests to negotiate the franchise agreement, takes expertise and experience.
Finally, launching a new franchise program goes beyond simply having the right tools. It involves knowing how to use these tools. I often tell clients it’s akin to giving someone the tools to build a house when they don’t know how to use the tools. For example, knowing the most effective way to generate franchise leads and sell new franchises requires competency and coaching.
Another situation that arises is when a business owner has their franchise documents constructed by a competent franchise attorney and then they decide to do the rest of the work themselves. These are the franchisors that have trouble selling a franchise and they can’t figure out why. In many cases they advertise on various Internet sites or in print media. They often receive a good amount of leads but “can’t get past first base.”
Although the Internet represents one of the greatest technological achievements in history it sometimes makes us think we have all the answers. From diagnosing a medical condition on line to gathering information about franchising a business, we sometimes think we can do it all. Its good to establish a knowledge base but to act upon this information can be a mistake if we don’t have the right information and the correct tools.
I’ve had business owners tell me that they wanted to franchise their business but weren’t quite ready because they didn’t have sufficient capital. I commend them for making the right decision. I’ve taken the time to explain to them the important steps for successfully franchising their business. This enables them to understand what has to be done, the approximate cost and how to set a realistic strategy for the future.
Understanding how to deal with franchisees when problems arise is an integral part of all successful franchise programs. Just like other aspects of franchising, maintaining and promoting positive franchise relations takes savvy.
Establishing a franchise program the right way takes time, effort and capital. There is unanimity among franchise consultants that the cost to franchise a business will range from $50-$75,000 and this doesn’t even include advertising, new staff and other expenses.
My Advice:
Look for the right amount of capital to franchise the business correctly.
Look for the proper advice and guidance if you want to do some of the work yourself.
If you can’t do either don’t cross the street to franchising until you’re ready, otherwise you could end up in trouble.
Copyright 2006, FranchiseKnowHow, LLC
Look Both Ways Before Franchising - To learn more about this author, visit Ed Teixeira's Website.
Like this article? Share it with your friends
Look Both Ways Before Franchising
By Ed Teixeira
Frequently, I receive telephone calls and e-mails from existing business owners who are considering franchising their business. Some of these individuals share in the desire to do most of the franchising work themselves, whether due to a lack of capital or an unwillingness to spend the money. Some have gone so far as to try and write a franchise agreement. Although I applaud their enthusiasm and self-confidence, I must admit that this approach will typically lead to problems.
First of all, franchising involves a contractual relationship between the Franchisor and franchisee utilizing a number of complex documents, including the franchise agreement and disclosure document. The content and use of these documents must conform to regulations of the Federal Trade Commission and a number of State Agencies.
Failure to comply with Federal and certain State regulations can result in substantial fines or worse.
Secondly, having all of the franchise tools in place including, the most effective franchise terms, operations manual, marketing materials, website, franchise sales processes and how to deal with requests to negotiate the franchise agreement, takes expertise and experience.
Finally, launching a new franchise program goes beyond simply having the right tools. It involves knowing how to use these tools. I often tell clients it’s akin to giving someone the tools to build a house when they don’t know how to use the tools. For example, knowing the most effective way to generate franchise leads and sell new franchises requires competency and coaching.
Another situation that arises is when a business owner has their franchise documents constructed by a competent franchise attorney and then they decide to do the rest of the work themselves. These are the franchisors that have trouble selling a franchise and they can’t figure out why. In many cases they advertise on various Internet sites or in print media. They often receive a good amount of leads but “can’t get past first base.”
Although the Internet represents one of the greatest technological achievements in history it sometimes makes us think we have all the answers. From diagnosing a medical condition on line to gathering information about franchising a business, we sometimes think we can do it all. Its good to establish a knowledge base but to act upon this information can be a mistake if we don’t have the right information and the correct tools.
I’ve had business owners tell me that they wanted to franchise their business but weren’t quite ready because they didn’t have sufficient capital. I commend them for making the right decision. I’ve taken the time to explain to them the important steps for successfully franchising their business. This enables them to understand what has to be done, the approximate cost and how to set a realistic strategy for the future.
Understanding how to deal with franchisees when problems arise is an integral part of all successful franchise programs. Just like other aspects of franchising, maintaining and promoting positive franchise relations takes savvy.
Establishing a franchise program the right way takes time, effort and capital. There is unanimity among franchise consultants that the cost to franchise a business will range from $50-$75,000 and this doesn’t even include advertising, new staff and other expenses.
My Advice:
Look for the right amount of capital to franchise the business correctly.
Look for the proper advice and guidance if you want to do some of the work yourself.
If you can’t do either don’t cross the street to franchising until you’re ready, otherwise you could end up in trouble.
Copyright 2006, FranchiseKnowHow, LLC
Look Both Ways Before Franchising - To learn more about this author, visit Ed Teixeira's Website.
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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 |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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