TES Insights
Is Franchising Right for You?
Franchising is a business model whereby the franchisee owns a business under a franchise agreement. The franchisor provides ongoing support and a blueprint for success, but franchisees must also meet certain responsibilities to the franchisor. While the decision to franchise is a personal one, there are several resources to help you make an informed decision.
Interviewing current franchisees to find out if franchising is right for you
One of the best ways to find out if franchising is the right choice for you is by interviewing current franchisees. Franchisee interviews offer an insight into the brand, the franchise model, and the opportunity itself. You can also research the franchise system’s franchise satisfaction report, which contains detailed information based on franchisee survey responses.
When interviewing current franchisees, ask them what was most rewarding and most challenging about being a franchisee. You can also ask them what challenges they encountered that surprised them the most. The answers to these questions will tell you how much their expectations were met. Also, you can get an idea about their personality and skill set based on their answers.
During your interview, be sure to ask for their contact details. This will help you identify the franchisees who have had the best success with the company. Also, ask about their success stories and challenges, and how much time they spent running their franchise.
Benefits of scale in franchising
Franchising provides franchisees with the opportunity to take advantage of economies of scale. This can mean savings in marketing, supply and other areas. This will translate to higher operating margins for franchisees. The franchisor can negotiate volume discounts with vendors to make these savings available to franchisees.
However, franchising is not for everyone. To get started, you should consider appointing an experienced franchise consultant who has experience working with existing brands.
In addition to the benefits of scale, franchising helps you expand quickly into new markets. For example, you could start a home-service business with one truck and grow to three trucks in a particular territory in three to five years. As you grow, you can scale by adding more salespeople and vehicles.
Requirements to become a franchisee
There are some basic requirements that you need to meet to become a franchisee. Firstly, you must impress the franchisor and show him that you have the skills to run his business. This will make you stand out from the other applicants. Secondly, you need to have sufficient financial resources. As a franchisee, you will need to be able to afford the costs that you’ll incur. And thirdly, you need to have some business experience. Lastly, your personality and dedication are important.
Before starting out, it’s a good idea to check your credit report. You can even use apps to do this. If you find any discrepancies, you’ll need to be ready to explain them to the franchisor.
Resources for your search
The Entrepreneur Source provides strategic, personalized coaching for people looking to transition out of their current career and find their path to self-sufficiency.
Future of Franchising has a series of podcasts featuring new and exciting franchises with information and insight into the brand, the owners and the opportunity. An example can be found in the Podcast Featuring The Dog Stop and there are many more.