Franchise Archives - BOLLYWOOD SURKHIYAN

Franchise Marketing Essentials

Compulsory centralized marketing programs are probably one of the supreme strengths of franchising. Pooling funds from all of the franchisees in a system gives them communally much greater marketing power. This fundamental fund can be used to do things that no individual franchisee could afford. The fund can also be used to hire professionals to produce advertising materials of far better superiority than what an individual owner could create. It is essential for anyone considering a franchise investment to know prior to becoming a Franchisee that the Franchisor’s marketing system is a good one. The essential qualities of a good franchise marketing program include these actions.

The first priority in any marketing system is knowing that the results will be more people using the products or services of the Franchise.

Second, allow franchisees to offer their opinions. They work in the market in which they operate and know what works and what does not. The final decision can be made by the franchisor, but franchisees will appreciate your allowing them to become involved. Create a franchise advisory group consisting of representatives of all of your franchisees. They should meet with the franchisor’s marketing group and provide input into future projects and campaigns.

Marketing funds should be directed primarily toward covering the costs of controlling the marketing effort (internal expenses, agency fees, etc.). Next they cover the expense of producing advertising resources (print, direct mail, radio and television ads, etc.). Finally, they pay for media purchases to place these advertisements for the advantage of the contributing franchisees. A frequent franchisee criticism is that too much is being spent in one of these area and not enough in another. Clearly there must be a practical balance between these needs.

Don’t spend more on brand advertising than on efforts to bring in more customers. Building the brand is very important but so is bringing in customers. A powerful brand is only as good as the customers in brings in. The marketing system should be carefully documented. A franchisor most likely won’t provide all of their proprietary internal marketing documentation, but you can ask for at least the table of contents of the marketing support manuals they provide to franchisees. This will give you a good idea of the extent of the strategies they provide in training franchisees to market successfully. It will also validate that they have improved their systems to the point where they have record them in manuals and other support and training tools.

The undisputable way to determine how the marketing program is working is to start asking the existing franchisees. You’ll find that they will be very accommodating on this topic since few things are closer to their hearts than marketing. Be precise and ask them how well the marketing works in terms of bringing customers to their business. Also ask if they think they’re steadily getting good value from their contributions to any required marketing fund. If you find a franchise system where the greater parts of the existing franchisees are unhappy about the way their marketing dollars are being administered, you can presume that others will be unhappy as well. If most of the franchisees are satisfied with the way the marketing fund is handled then you will often find that franchisees are happy about most other factors in their business as well.

Franchise Marketing Ideas for Explosive Growth

To expand your franchise you must use marketing techniques which will help to reach your target audience. Franchise marketing involves two areas. Customers are first and of course Franchisees. Both can benefit from the same marketing ideas and techniques, but the results differ significantly. Unfortunately, many franchise companies miss this little fact and focus their marketing methods too heavily on one cause over the other.

Search Engine Marketing (PPC & SEO)

Search engine marketing means bringing increased traffic to your company on search engines through paid search billboards or other ads as well as natural search earned through SEO practices. Distinguishing between how this helps your franchise grow and how consumers will react is an important difference:

Consumer: PPC and SEO techniques will help drive eligible traffic to your franchisee’s local page. This eventually helps you generate more leads or sales because your franchisee location or information pages will hopefully be shown to a direct and relevant audience that is most likely to become a long-term client or customer. It saves consumers time because they are instantly taken to the page that means the most to them because of your ads and to SEO efforts.

Franchise Development: Each type of marketing will help drive traffic to your website which in turn will help create more leads. This essentially benefits franchise development the same way as with consumers. Your ads and organic search submissions are optimized for this audience and deliver prospects attracted to starting a franchise.

Encourage Online Testimonials.

Testimonials are a strong method for showing your success and satisfaction amongst franchisees and customers. Because you manage the reviews you display on your site nevertheless they can make a big difference:

• Consumer: Testimonials provide opinions submitted by satisfied customers and it is important to include them on your site.

• Franchise Development: Testimonials are important to franchise development because they permit prospective franchisees to see how current franchisees’ businesses are functioning as well as their experiences with the corporate office.

Franchise Development

The objective is to invite franchises in the locations where you don’t already have a franchise. Social media can help make this a likelihood by showing the opportunities your business offers next to your target market. Those who are seeing your social media crusade are your target market; consequently your products and services as well as those who relate are all in one place. Once you see who is the most active on social media, you can start generating more personalized content and emails to ultimately start up a conversation.

Build familiarity in the media.

This is one facet of franchise marketing that has become more imperative in recent years. Building familiarity of your brand in the media is a great way to find that stability for your two goals:

• Consumer: Local newspapers and TV stations want to know what’s happening in the neighborhoods they cover. Connecting with publishers, editors and producers with press releases of anything newsworthy at your business will always be of interest to media professionals. Offer to write a free column that benefits a news outlet’s viewers. Many local media sources will show interest in your business. Always make sure you’re offering pertinent information and have something you can offer back to these media outlets.

• Franchise Development: Build relationships with media outlets and provide them with in-house research performed about the industry you operate in and how the franchise system operates in general. The information you provide should be valuable and interesting that the general public.

Infographics

An infographic is an eye-pleasing portrayal of intricate data. Gather your data, and statistics, and create an infographic to transmit your company messages. They can be used in print, on blogs or on social media platforms.

Preparing Your Message

Create a budget to make your infographic. When creating an infographic, using various free programs and templates is not a bad idea. The collecting of data and creating charts and graphs can be time consuming. However, the payout could be substantial.

Choose your message.

The infographic should provide details about your business while not being overly complicated. Keep away from messages that are sales-focused. Buy our product is not a good communication to present. Stating how a product expands quality of life or helps to improve business is a better choice. Non-profits, universities and individuals can profit from infographics, in addition to companies. Infographics can present a story to potential customers more easily than you can by speaking.

Assemble data that sustains your message.

Choose between assembling your own data or finding reliable data from other sources. The following are good places to find statistics if you can’t collect them yourself:

• StatPlanet provides worldwide statistics.

• Search government websites such as the US Bureau of Labor Statistics or the EPA to get dependable statistics.

• Trade journals and scientific studies provide study-based data.

• Make sure to list your source(s) for your statistics at the bottom of each graphic section. Use the most trustworthy sources that you can find.

• Use industry reports from Ibisworld.com.

Input your data into an Excel spreadsheet. The data that you gather can be entered into an Excel spreadsheet where you can create charts of varying types to use in your infographic.

Choosing Infographic Tools

A graphic designer. If you want a fully personalized infographic, you should consider hiring someone who can produce it. Rates vary by designer so make sure your budget is adjusted accordingly. If you want to use your final infographic to improve web traffic or social media content, then you should hire a graphic designer. A graphic designer with experience will be extremely beneficial. Use a large headline. Don’t try to save space by making the font smaller. Use a big font that is easy to read, so that it catches the reader’s eye.

Use your logo.

If you want your website found, make sure your logo, website and social media URLs are prominent in your infographic. If you have a general message that you want to go viral, you can skip this step.

Use photographs.

If you prefer you can use photos over illustrations. Use between one and six photographs. Make sure to leave plenty of room to separate the images and add text.

Papa John’s Franchise Review

Papa John’s is a Pizza delivery chain of restaurants in the United States. It is named as one of the largest and fastest growing pizza companies in the world and is ranked high in customer satisfaction.

The concept of Papa John’s was visualized and initiated by John Schnatter who started his career in the same industry by delivering pizzas as a pizza driver. After graduation he had an opportunity to work in his father’s bar, but he wanted to serve his own pizza to his own customers. To accomplish this goal John sold his car.

In a very short time, Papa John’s has achieved huge success of being one of the largest pizza companies and getting high ranks in customer satisfaction. One reason for their success, as stated by their tag line “Better Ingredients, Better Pizza”, Papa John’s uses the finest of ingredients in its preparation and presentation. From water to protein enriched flour, meats, cheeses, vegetables and other ingredients Papa John’s focuses on fresh, clean and hygienic products. Each pizza is served with the required garlic sauce to dip and thin crust.

In case you are looking to partner with Papa John’s in the business of serving the high quality pizzas to your customers, and opting for a Papa John’s franchise you must have at least a rough idea about the initial franchise fees.

Franchise Cost:

• Minimum net worth for one unit is $250,000; 4 to 10 units are $1 million, and 11+ units require $2 million in net worth.

• Liquid assets consisting of cash and/or readily available financing should total at least $250,000 for any number of units.

• At least one partner, a successful business management background, and close proximity to the location chosen.

• Franchise fee is low at $25,000

• 5% ongoing royalty fee payable monthly.

• The estimated investment is between $160,000 and $395,000 with an average unit of 1200 to 1400 square feet in a strip center running about $220,000.

• Renewable every 10 years.

Pros

• Absentee Ownership – Actually encouraged if you don’t have QSR experience.

• Ranking – Recently named the #10 Global Franchise by Entrepreneur Magazine.

Cons

• Forced Marketing Budget – A franchisee must spend a minimum of 7% of the monthly net on marketing.

Papa John’s Franchise Information:

Business Established: 1985

Franchising Since: 1986

Franchise Fee: $25,000

Total Investment (US): $160,000 to $395,000

When looking to start any business it is important, particularly considering today’s market, that you look for specific ways to cut minimize or reduce overhead and risk. Any business is going to have risk, but it is important to have a full understanding of the amount of investment, startup cost and “ROI” (Return on Investment).

Did you know that 80% of ALL franchise endeavors fail in the first two to five years leaving large debts looming for years thereafter?

You can cut your risk by taking advantage of the new age of entrepreneurship. Opportunities have emerged in the online market that are creating millionaires every single day. Learn more about the exciting opportunities tied to a business model that begins profitable by visiting: http://whatsbetterthanafranchise.com.

ZARA Franchise: Invest in Your Future

When we look at the current market scenario where jobs are a scarce commodity as the economy is in a downward spiral, there is a big cause for concern. Therefore, it is of a paramount importance that we meticulously plan our future well in advance. For a middle class person like me, it’s a dream to own a business and ZARA Franchise gives you that rare opportunity. It is a business model which yields relatively high returns on a low to medium investment. ZARA is a very well-known and a very well respected brand all over the world. An opportunity to associate with the ZARA Franchise would give you an entrance into, and understanding of, the ever growing and extremely lucrative industry of apparel retail.

ZARA Franchise was founded by Amancio Ortega and Rosalía Mera in A Coruña, Galicia, Spain in 1975.It was however opened out of desperation and as a last resort, when a wholesaler cancelled a large order in which all of Ortega’s capital was invested. So he decided to sell the merchandise himself and opened the first ZARA store. The first store also featured low priced lookalikes of popular high end brands and it proved to be a huge success.

As the ZARA Franchise gained popularity, Ortega started the global expansion of the brand in 1980 and entered the US in 1989. ZARA is controlled by the parent company called Inditex group which also own the companies like Massimo Dutti, Bershka, Oysho, Pull and Bear, Stradivarius, and Uterqüe. As of 31st January 2012 ZARA has over 1631 outlets in around 82 countries and has over 42 stores in the US. With the contribution of US being marginal at the moment to the $2.5 Billion profits posted by Inditex, the growth opportunities of the ZARA Franchise in America are immense and with ZARA planning to open multiple outlets in all the major US cities the future of the brand is looking very bright.

The business model of the ZARA franchise is based on the motto “High Fashion at affordable price”. ZARA stores don both men’s and women’s clothing and subdivided into lower and upper garments, accessories, shoes and cosmetics. ZARA boasts low prices for smart in-fashion clothes. It takes two weeks for ZARA to develop and display the products in their stores. ZARA Franchise launches over 10,000 different designs in a year which is way higher that of the industry average. ZARA has over 200 designers who design new products keeping in mind the current trends. They also take into account the feedback received from various store managers from all over the world and therefor keep abreast with the consumer’s likes and dislikes and design their products accordingly. They produce in small batches per product with an extensive variety.

The other unique factor in ZARA Franchise business model is that, it’s a vertically integrated retailer unlike other apparel retailers. This gives them a tremendous control over all the aspects of production like supply chain, designing, manufacturing and distribution of it’s product. This makes the business more cost effective as they don’t have to outsource the different processes. ZARA also boasts “word of mouth marketing” as they believe that if the product is good it will sell. Window displays also play an important role in promoting the products.

ZARA offers their franchisees full access to corporate services, such as human resources, training, and logistics at no extra cost. They also allow the stores to return up to 10% of purchased merchandise, which is a higher level than many other franchises. The ZARA Franchise usually runs into profit by the end of the first year and if there is any debt on the start-up cost, it would be recovered by the end of the third year. All you have to do is contact the corporate office and depending on the city you live in, you can apply for the ZARA Franchise.

Kinderdance Franchise Opportunity Review – Kinderdance Franchise Facts

Do you enjoy working with children? If you are in search of such a business, this review will outline a very popular company. This Kinderdance Franchise Review explores basic information of this business and investments related to it.

Background: Kinderdance was founded in 1979 by Carol Kay Harsell. Its main office is in Florida. The company started offering franchisee in 1985. Now it has more than 110 franchises in United States. The Kinderdance Franchise offers an innovative program that focuses on education through dance. The idea of the activity is to offer different activities like motor development, Gymnastics and fitness programs mixed together with education that is numbers colors, words, songs and shapes to educate children of the age group 2-12 through the program. As well as other unique and innovative programs that assist in early childhood education.

Benefits of a Kinderdance Int’l. Inc. Franchise: Kinderdance Int’l. Inc. is a fast growing company in the United States. It is engaged in working in an interesting and different area of children education. It offers a great business opportunity for people who like to work with children. As a Kinderdance Franchise owner you can start your own business that has great opportunity in your area. It is home based business with many benefits. Some benefits of the franchise include:

· It is a home based business with very low investments and low overheads. You can work with children, which is perfect for those who like to work with children.

· There is no night work as well as weekend working requirements.

· Kinderdance Int’l. Inc. offers finance assistance for its franchises.

· It provides systematic programs including all activities like dance, Gymnastics, and fitness programs to its franchises.

· As a Kinderdance Int’l. Inc. Franchise, you can receive comprehensive training. It gives ongoing support and marketing aid for your business.

· The Kinderdance Int’l. Inc. Franchise has very simple business procedures and one can start it part time with 1-2 employees.

There are many opportunities to grow your business through child care centers, pre-schools, and other schools.

Investments required: The franchise fee ranges from $12,000 to $40,000. The ongoing royalty fee is 6-12%. The terms of agreement is for ten years and is renewable. The cash liquidity requires $14,950. With the availability of finance assistance, one can own Kinderdance Int’l. Inc. Franchise investing small amounts.

Kinderdance Int’l. Inc. is engaged in offering dance and education programs for the children of age group 2-12. The programs are designed with combination of Gymnastics, dance and fitness program along with songs, numbers, colors and other educational aspects for educating children with dance activities. This is a vast industry of around $28 billion. Individuals who enjoy working with children can definitely benefit with Kinderdance Int’l. Inc. Franchise Review as opposed to choosing a business in a different field. Kinderdance Int’l. Inc. provides all training and marketing support however, as with any business it is up to the business owner to successfully grow their business.

Key Factors to Consider When Buying a Travel and Tour Franchise

If you are considering investing in a travel and tour franchise, it is likely that you have many questions. For many people, the idea of setting their own business can be incredibly daunting experience, but also one of the most liberating experiences of their lives. In this article, we will look at some of key considerations which you should factor in when making this decision.

The travel and tourism industry is literally booming globally – now contributing over two trillion pounds to the economy. More and more people are thinking about how they can get involved in the travel and tourism industry, recognising the explosive and exponential growth. Starting your own travel business from scratch is one option that people often consider, however starting without a network of contacts or even a base starting point can be extremely tricky. A huge number of start ups will fail within 12 months, so always try to avoid this pitfall.

The more popular market to success within the travel industry is the travel, or tour franchise market. What this essentially means is instead of setting up a travel business from the beginning, you can buy a travel franchise which actually gives you a firm starting point to begin your business. There are quite a few travel franchise businesses online, however there are probably only a couple of established businesses. If you do choose to purchase a tour franchise, make sure to do your research and pick the franchise company which is the best fit for you.

So what can you expect in terms of support when you buy a travel franchise? When buying a franchise, there are always different levels of support. Think of this a three-tiered membership: platinum, silver and gold. The more initial investment that you are willing to put up, means the greater level of support and guidance that you are likely to receive. Nonetheless, there are some common levels of support which you should expect from all travel franchises.

The first thing you should expect is a fully comprehensive training or induction programme. Lots of franchise operators will actually offer a residential training course, so this is likely to be an intensive course over a number of days or weeks. This can be a great opportunity to spend significant time with the franchise tour operators and really pick their brains, whilst trying to soak up an incredible amount of information.

It is also likely that they will be inducting a number of other new franchisees at the same time. This is also a fantastic opportunity to meet some like minded people who are also at the beginning of the same journey that you are on. If you can take the opportunity to spend time with them and get to know their motivations behind setting up a new franchise, you can increase your knowledge but also begin to build up your travel network. In the travel industry in particular, your network and who you know can really be a determining factor in how well you do.

You can also expect some of the more practical tools for setting up a new franchise. This might include a laptop, hopefully pre-loaded with any specialist software and templates that you might need. This may not always be included as a standard support tool, so you should always try to make sure that you fully understand everything that is being provided. A functional website, which is branded towards your company name and logo, is also something which you expect.

Finally, you might also receive some branding materials, such as leaflets, tri-folds and business cards. Remember when you meet potential clients, handing them a business card can be a great way to exchange your details with them and keep in touch.

Do First Generation Franchisees in a Franchise System Get the Shaft from Franchisors?

On numerous occasion former franchisees of various franchise system have complained that as the franchisor grew the rules changed and eventually forced them out of business – is this a common occurrence? Well, some believe it is and several have emailed me about this problem as I am a co-author of Franchising 101, the premier book for those considering on buying a franchise and wishing to learn the ropes. One of these former franchisees, I replied in an email to recently:

I see you seem to be upset with the first generation of “franchisees” in a new system. I have generally found that the newest franchisees of a new system either get the red carpet or they are forced out later, because the franchisor is able to get more money for territories sold too cheap or too large.

It is unfortunate if indeed a franchisor has forgotten from hence he came. I can remember first starting out in business and running my small business for over a decade, which was nearly identical to the franchised units we later sold. Still, the former franchise who felt slighted by their franchisor stated:

I know, as a former franchisor, that you defend franchise failure as a failure of the franchisee and not a failure of the franchised business plan.

Well the fact is that I am not obligated to defend anyone, actually, I was for a long time the anti-franchisor, franchisor actually. What I am saying here is that it is not so black and white. I have had franchisees from hell, I have had to sell franchises to people I did not want to, because of laws in franchising and then been screwed over by franchisees not paying royalties, changing the name of their business and continuing, when we lost money setting them up and they cheated me. So, that is another thing that happens, over time you are less lose in the deal making and a little harsher to prevent being taken advantage of.

The former franchise then asserted that the franchise failure rates and the information is hidden from view and even the SBA does not come clean on the problem. He stated:

The SBA uses the Loan Default Rate on Franchises on the SBA Registry to prepare Risk Profiles and you can’t dispute that the failure rate of first-generation franchisees, if many, does indicate that there is something wrong with the plan.

I do not dispute anything, I tend to agree, although the franchisors that are very big, rarely, if ever share their economies of scale with their franchisees, they over charge them for supplies and work to squeeze profits out of their signed up captured audience. Yet the larger franchisors get carte blanche with regulators, literally. This can be problematic in my observation and first hand experience, thus I am not amused and fear that someone somewhere named Adam Smith did indeed warn us all of some of the problems with government regulators who cozy up to one business, against another.

I have found that there is something wrong with every business plan, even the ones I have created. You see, planning is about change and adapting so you must change with the flow, but over regulation prevents that, this is why Schlotsky’s Deli got caught with their pants down with the Atkins and South Beach Diets were all the rage, belly up along with Krispy, that got Kremed. Franchising does best when the government stays out of the way and allows free-enterprise to work. Think on this.

Some say that in the UFOC – Uniform Franchise Offering Circular that is required to be given to new franchise buyers that in Item # 20 franchisor are able to hide franchise failures as transfers. These critics state that regulators allow this musical chair game and it impedes the franchise buyers knowledge of the true success rate and hides their failed business plans. Therefore all the original founding franchisees, which may have failed or been sacrificed for growth strategies in some cases are not recorded as having failed, even if they transferred in a “fire sale” type situation.

Of course, once the franchisor is up and running with 100s of franchisees the Business Plan, system and such is completely different and changed. The original founding franchisees generally have lots of other advantages too. Although you are correct about the original franchisees. The franchisor is busy trying to make it work and balance while trying to comply with all the insanity, rules, the changes and modifications needed for regional variation and dealing with new things that they are not use to. Franchising is a lot different than running company owned units, it is unbelievable the transition.

Critics remind folks like me on this side of the debate that under the 1970’s Franchise Rule, the FTC was to protect franchisees by requiring franchisors to disclose information to allow the franchise buyer relevant data to make an informed investment decision and ascertain the risk.

Indeed this is the actual history of franchising law and the FTC perhaps, but those laws have grown and now you see the 250 + pages of disclosure documents that are needed to comply, which in the end serve no real purpose. Imagine the barriers to entry for new franchisees $45,000 to produce documents, $25,000 per year to stay registered in the registration states, $30,000 minimum for audits.

Meaning a new franchisor has to pass those onto the new franchisees. Pretty unfair, especially as a new franchisor has a tough time getting going, after all who would buy a franchise if there are none already? Thus the franchisor has to make deals, cannot be too choosy and this is the basis for most of the original franchisee failures, but remember the over regulation is a factor hurting the franchisor.

One recent knowledgeable franchising critic to these issues and a former franchisee, who felt slighted by his franchisor, stated that the columns in Item # 20 of the UFOC are severely misleading. He pointed out that the transfer columns in Item #20 were a solution to the dilemma of ambiguous information in the disclosure document, but all this has done is allow for manipulation of franchisee failures that are then hidden from the franchisee buyer.

Yes, this does occur, whether by design or necessity or dodging the truth in disclosure and since it is legal, it appears that it is done more often than it ought too. Nevertheless, we are talking a legal technicality, but if we ditch this all together then the franchisee buyer would still not know. The entire UFOC and the new rules are ridiculous, too cumbersome and a slap in the face to the right of citizens and the right to free contract, and to the point of misleading information, well that is yet another result of the over regulation and insanity of the UFOC format.

Some believe that some franchisors like the format charts for Item # 20 that allows them to hide negative information, yet I know of no one who has ever said anything good about it (franchisor, franchising attorney or franchisee) and thus, I often recommend the book “Tips and Traps” for folks who wonder about Item #20. One angry former franchisee stated that Item # 20:

It gives the Government deniability because they don’t really know what the transfer columns are indicating in terms of success or failure of the franchise that is being regulated, and they don’t want to know.

I think most consumers and franchise investors give the regulators too much credit. SPAM went up 3000% since the FTC took over that task, Identity Theft is out of control and what do they do, harass the little guy and make things tougher. Indeed, the biggest purveyor of American’s personal identity is the government and they give away the most information, now they will be giving databases to foreign governments under the auspice of anti-terrorist information.

Thus it appears to at least this Franchise Consultant that if the consumer is looking to government to protect them, and thus believing that they can skip some of their own checking and due diligence that they are in for less than they bargained for. Buyer beware, well that’s my best advice and it comes from a heck of a lot of experience, there is no substitute for due diligence let me tell you.

Next in this ongoing debate and saga is the issues of churning, and how some franchisors who call it re-selling have used this as a franchise system management tool to eliminate first generation franchisees in order to make money selling them again and tightening the controls of the franchise system, as it grows. As a franchise consultant and studier of the industry for years, I admit there is a “Re-selling” or the not so nice term churning strategy going on in Franchising today.

Many attorneys at the ABA forum (which I scan daily and for the past 5-6 years) are concerned about these issues also. Indeed not long ago a few were trying to figure out what that guy in Las Vegas is doing, he seems to be the outsourcing churning king. Sure, this helps franchise systems and it is completely legal, but what about the franchisees who are churned and counted as transfers instead of failures, having lost all their money and nearly gone into bankruptcy and barely got out by the skin on their teeth in order to save their credit or prevent a larger debt as they leave?

As good as this new lady is at the FTC, Deborah, a President Bush appointment, she has no clue as to the blatant incompetence of the FTC in the Franchising Realm (my opinion, I have plenty of documentation, if anyone is interested to back up my comment). Many former franchisees and franchise rights advocates in Online Franchising Forums and Blogs state there are number of large Corporate franchises that do a significant amount of churning.

They name names like MBE – UPS Store, Quiznos, Subway and 100s of others and state they are hiding all the failures and bankruptcies in the “Transfer Column” of the UFOC in Item # 20. I have seen it too, not necessarily with those particular companies, I have not checked, but I have seen this scenario too many times to mention, thus I realize it is an issue.

In fact these comments appear to be spot on with regards to Large Corporate Franchisors and Susan Kezios, President of “Women in Franchising” and “The Franchisee Association” in Chicago told me the same thing. It seems rather than addressing this issue at the FTC, since it is fully legal, the regulators will go after companies they think will not fight back or that are slightly outside the protection of the Industry and much smaller and bury them in court paper work. To me it seems outrageous and disgusting, but I did not make the law.

Once, I sat in on an MBE franchise seminar once to see what they do, I felt bad for those investing in such franchises, indeed, I felt sick to my stomach, many large franchisor put on what appears to be more of a dog and pony show in franchise sales seminars. Some former franchisees say that the SBA helps hide the risks in modern day franchising. In my opinion this is a half correct statement. Other critics say that the Franchising Industry is subsidized by government, again, in observation that is also hard to argue.

You know this goes way back to when all the gas stations were selling to foreigners after the fall of the Shaw of Iran. Folks came to the US and wanted to start a business and many would buy gas stations because the understood that Oil and Fuel = Wealth. Then these immigrants who came with down payment monies, business skills would buy a fuel station franchise. When they were not making money as fuel re-sellers and franchisee gas station owners, then they would sell the non-performing business to another immigrant.

Often this went on and on, churning, sometimes over 5-6 sales. Yes, all SBA loans the price was 60% over its value – hello taxpayer on the last loan that defaulted. I thought that was unfortunate, but when you talk about subsidy, are at least partially correct, probably more than they even realize, as most folks are not very aware of this issue, which is water under the bridge now.

Most of those buying a franchise borrow money in order to attain the American Dream of owning their own business. They are not gambling in the stock market as one critic of franchising stated, nor are they using discretionary funds to buy the business. They are looking for self-employment as an answer.

I concur with these critics actually. In fact, this is what every single franchise buyer told me, and they were serious, most I sent away, as our franchise is hard work and lots physical work and as labor got tight. Apparently, this is why we have franchise laws to protect the investing consumer, but these franchise laws are not serving anyone, not the consumer or the franchisor therefore both are hurt in the end with bureaucracy, over regulation and huge legal fees. Since franchising is a win/win, no one is well served. It is time to de-regulate the franchising industry, and get government out of the way.

21 Secrets to Franchise Business Success

1) Evaluate your tolerance for risk

Opening a new business is a scary prospect. There’s a lot of personal, professional and financial risk to consider. It’s natural when contemplating such a profound step in your career to look at ways to manage your risk and increase your chance of success.

The Small Business Administration conducted a survey that found 62% of non-franchised businesses failed within 6 years. A separate study by the United States Chamber of Commerce found that 97% of franchises were still open after 5 years.

The research conducted by these independent third party organizations clearly demonstrates that choosing a franchise business carries significantly less risk than starting a business on your own.

2) Work with what you’ve got

Making a list of your strengths is easy. But when launching a business, it’s also important to make an honest assessment of your weaknesses.

Before you get to work selecting a franchise, take the time to develop a list that honestly depicts your strengths and weaknesses as a potential business owner. Then use this profile as a tool to help with the decision making process.

Ask franchise owners questions about the duties they perform, and compare the job requirements to your profile. If the business has the potential to be a good fit, the skill sets required to run the business will either be skills you already have or skills you can learn quickly. If this is not the case, it’s best to keep looking.

If a certain aspect of a franchise has a steep learning curve but the business is otherwise a great fit, you may want to consider hiring someone experienced with that position. If this is the choice you make, be sure to include their salary and benefits in the financial business plan.

3) Remember to run the business

Many potential franchisees make the mistake of thinking they’re limited to buying a franchise in their current field. In fact, this might be the worst way to go.

Some franchises will not allow someone skilled in a particular industry to buy a franchise in that industry. For example, a mechanic may not be allowed to purchase an auto repair franchise. Skilled technicians sometimes find the transition from hands-on work to management work difficult to make, and are tempted back onto the floor to do the job they’re familiar with.

The problem with this is that you grow the business by running the business, and what a franchisor wants to see on the bottom line is growth. A business owner needs to be out networking, marketing and interacting with customers. If there’s too much work on the floor of an auto repair franchise, then the owner – even if he’s a highly skilled mechanic – needs to hire more mechanics.

Basic business skills are transferable to any franchise. If your current position involves universal roles like sales, marketing or accounting then your franchise options are practically unlimited.

4) No business is recession-proof

There’s no such thing as a business that can’t be impacted by a faltering economy.

There are, however, certain industries that are considered recession “resistant.” These are generally products and services people can’t do without no matter how much they’re cutting the budget.

The good news is there are hundreds of great franchise opportunities in recession resistant industries. The following are just a few examples:

Top recession resistant industries: Food · Automotive · Healthcare · Medical·Clothing · Education

Recession resistant franchise industries: Fast food restaurants· Automotive maintenance, parts and repair · Weight loss and fitness · Resale shops and discount (dollar) stores · Education (tutoring) and child care

5) Objectively evaluate professional advice from personal sources

Friends and family have your best interests at heart, and their advice comes from a place of love and concern for your well-being. No one would suggest making the personal, professional and financial commitment to launching a business without consulting your loved ones.

But friends and family are not subject matter experts and their advice can – intentionally or not – discourage a new business venture. The people who love you worry about what could happen if you fail, and their instinct will be to protect you from the risk.

When it comes to the final decision whether or not to proceed with purchasing a franchise, of course you will carefully weigh all the advice you’ve received. The key is to rely most heavily on the advice offered by industry professionals.

6) There’s no such thing as a free lunch

There are countless “free” franchise brokers and consultants out there claiming to offer unbiased information on franchise opportunities. They will work with you to assess your needs, and use your professional profile to help make recommendations on franchise opportunities that may suit you.

The problem with these services is that they get paid by the franchises for selling franchises. That means they are naturally only going to show you options they’ll get paid for. And in the case of high profile franchises that may offer them 2 to 4 times the average commission, there’s a real risk they may steer clients to those businesses whether they’re a good match or not.

These broker services may have access to detailed data on several hundred franchises and they can be a great source of information. Just be cautious about their recommendations, and get a second opinion before investing your money.

7) Tune out the hype

Never before was the adage “if it sounds too good to be true, it probably is” more applicable. You’re going to hear a lot of hype – good and bad – while assessing potential franchise opportunities.

Between marketing blitzes and human nature, it’s easy for success stories to spread like wildfire. Think about the guy who lost weight eating Subway – that story is so pervasive it’s become almost impossible to separate the allegory from the restaurant in the public’s perception. The hype surrounding that marketing campaign will have an impact on potential Subway franchisees for the foreseeable future.

It’s also natural for people to look for something to blame when things go wrong. Because of this there are also going to be negative, emotionally charged franchise stories in circulation. However, keep in mind the nuanced details that created such situations are never discussed; only the attention-grabbing outcomes.

No one is suggesting you completely ignore these stories, because hidden beneath the hype there are likely valuable lessons to learn. Learn from them what you can while keeping in mind what they are: unique situations with complex back stories that probably have no bearing on your success whether or not you choose the same franchise.

8) Look beyond the big brands

Sometimes it’s easy to forget there are thousands of franchise opportunities out there, because the big name brands get all the attention. When you’re in the early stages of your search, it’s a good idea to bypass the overblown marketing of the huge franchises and make an effort to learn about the “no-name” franchises in your industry of interest.

There are quite a few advantages to lesser known franchise brands. For instance, they are often cutting edge concepts that can get a lot of marketing attention. Lesser known franchises haven’t yet saturated your local market. And they’re usually less expensive to start up, which means less financial risk.

Of course, you may be looking for the security and benefits that come with a big name franchise. Criteria such as national marketing campaigns, standardized employee training, management support and strong purchasing power may be at the top of the checklist for what you’re looking for in a franchise, and there’s nothing wrong with that. But if you’re not interested in being another instantly recognizable box in another strip mall, then a ‘no-name’ franchise might be for you.

9) Look beyond the price tag

Just because a franchise is more expensive does not mean it will be more successful.

It’s important to evaluate every aspect of a franchise – financial projections, monthly franchise fees, franchiser support levels, issue response time, customer base and marketing, to name a few. The price tag is a factor to consider, but should not be the sole criterion for evaluating the quality of the business opportunity.

Once you narrow down your preference to a particular industry, conduct due diligence on 2 to 3 franchises in that industry. Gathering adequate information on several comparable franchises will allow you to make an informed decision.

10) Comparison shop

Once you decide a franchise is right for you, keep looking.

If you decide to purchase a franchise of Coffee House A, then it’s time to start looking for reasons not to buy it. Build a list of questions, and then go talk to owners of Coffee House B and Coffee House C.

Be blunt – ask the competing franchise owners why they feel their business is better than Coffee House A. Ask them what made them choose B over A and C. Ask them if they would recommend you buy the same franchise, and don’t stop digging until you’re clear on the why (or why not) of their response.

Build a spreadsheet comparing the details of the franchises. Include data such as the benefits offered, financial commitment required, estimated monthly expenses, commercial lease requirements and franchise fees.

If your franchise preference stands up to the scrutiny, then you’re on the right track.

11) Contact current and former franchisees

The best way to find out if a franchise is right for you is to go behind the scenes and ask a lot of questions.

Before making a buying decision, prepare a list of questions. Contact at least five current franchisees and make an appointment to discuss your interest in the business. Whatever else you discuss, be sure to ask the questions you prepared.

Try to arrange an all day job shadow session with at least two current franchisees. This will allow you to observe the daily operations of your potential future business without committing to personal financial risk.

Contact several separated franchisees to learn about their experience. Understanding their reasons for getting into – and out of – the franchise can impact your decision.

12) Do your due diligence

All franchises are not created equal, and it’s your job to sort them out. The information is out there – all you have to do is go get it.

Conducting due diligence on a franchise opportunity should include:

· Check with the Better Business Bureau for complaints

· Check with the State Attorney General for complaints

· Speak with the franchisor

· Request a Franchise Disclosure Document (FDD)

· Attend a discovery day with the franchisor

· Make at least 10 calls to current and separated franchisees

· Make appointments to meet franchisees and visit the operation

· Job shadow a franchise owner (or owners) for at least a day (longer, if you can)

· Repeat as necessary

The purpose of due diligence is to reduce your risk. All the steps are necessary, but the most important step is interviewing and job shadowing a current franchise owner.

Some franchise owners will allow potential franchisees to spend weeks at their business learning the ropes. They may be willing to share detailed financial data, and can confirm or refute claims made by the parent company. A franchise owner can answer questions the franchisor may be legally bound from discussing. You may be able to make assessments about your own management style or potential business location by observing theirs. Visiting operating franchises in the course of due diligence may be the single best method for evaluating your potential success with a franchise opportunity.

13) When the time is right, hire a legal and financial team

Getting expert advice on the legal and financial aspects of a potential franchise purchase is essential. Some buyers skip this step to save money, but this is not the place to cut corners. The relatively small fees a lawyer and accountant charge pale in comparison to the enormous financial loss you’ll incur if the business fails.

Bringing in the legal and financial experts too soon in the purchase process can also be a mistake. Their professional opinions are necessary and valuable, but their advice can be expensive and potentially counterproductive in the early stages of your search. It’s crucial to remember when seeking their input that they should not choose the franchise for you.

Bringing in an accountant too soon can mean paying for them to run Profit & Loss data on every franchise that catches your eye. This onslaught of numbers can cloud your judgment, particularly if they’re taken outside the context of in-depth, due diligence research on each business.

Bring in an attorney too soon can mean paying them to review the Franchise Disclosure Document (FDD) for every franchise that strikes your fancy. Studying detailed franchise information at such an early stage with a legal advisor who doesn’t understand your personality, lifestyle and professional preferences can be detrimental to your search. You could end up inadvertently being talked out of the perfect business.

Waiting to bring in legal and financial advisors until your franchise choices have been narrowed down dramatically is not just cost effective. It’s the logical way to use the team’s expert advice to your best advantage.

14) Feel the fear and do it anyway

The best way to manage your fear of buying a new business is to manage your risk. The best way to manage your risk is to learn everything you can, then proceed according to what you’ve learned.

Start the process with no intent to purchase. That removes the chance of getting so excited about business ownership that you take an irrevocable leap with the first prospect you research.

Above all, ask yourself “can I picture myself doing this all day?” If the answer is “no,” then be grateful for what you’ve learned and move on to researching a different industry.

The research and due diligence processes get easier with practice. It may take a few attempts to find the perfect franchise, but your efforts are not wasted. By actively engaging in the search, you’ve made yourself familiar with the process. And there’s no fear in the familiar.

15) Go it alone

Business partnerships are appealing on the surface because the idea of splitting costs, liability and workload is tempting. But it’s nearly impossible for any two individuals to work together as much as necessary to launch a new business without problems developing.

If it is a financial necessity to form a partnership in order to purchase your franchise, it’s crucial to define the roles each partner will play well in advance. If at all possible, try to structure the partnership so you own 51% and have the power to make binding decisions for the business.

Entering a partnership is not to be taken lightly, and should not be done without consulting your attorney.

16) Lease, lease, lease

Most franchises provide detailed specifications on the type of commercial real estate required to launch the business, and many will assist with the search for an appropriate property.

Leasing a commercial property is nearly always preferable to purchasing one. The capital required to purchase a property is better reserved to fund operating costs for the first few years. It’s also preferable to sign short lease terms with options to extend rather than committing to a long lease term.

Because many commercial leases include taxes and assessment fees buried in the fine print that can cause financial problems for your business, it is very important to have your attorney review any commercial lease before you sign it.

17) Don’t forget you’ve got to eat

One of the most common mistakes people make when working up a financial business plan is forgetting to pay themselves. This simple oversight is at the root of a lot of failed businesses.

In a perfect world we would all have enough in savings to go a year without a paycheck, and everything a new business makes could go right back into making it stronger.

The reality is we’ve all got bills to pay. It’s important to be honest and thorough when estimating the salary the business will need to pay you. Cutting yourself short will create enormous problems, especially if your fledgling business can’t afford to give you a raise yet.

This is one area where decisions you make for the business directly impact your personal life. The franchise isn’t going to do you much good if your heat’s turned off and the bank is foreclosing. Taking extra care with this critical detail could someday save more than just your business.

18) Consider alternate financing options

In the current economic climate, strict lending standards are making it harder than ever to get a commercial loan issued. When loan approval is a problem, it is worth considering your 401(k) or IRA as a resource for purchasing your business.

These self-directed retirement structures do permit individuals to actively invest their retirement funds into a business without taking a taxable distribution or incurring early withdrawal penalties. A successful use of this financing method offers the chance for a greater potential return on your money than the original investments.

Using your retirement funds to purchase a business is not to be taken lightly. But if done right, having your own business could be the best retirement plan of all.

19) Lead by example

If you’re not working hard for your business, neither will your employees.

At the end of the day, the only one who cares if your business succeeds is you. This is not the time to kick back and count the money. In fact, that attitude is the quickest way to ensure that soon there won’t be any left to count.

Even the most diligent business owners may forget that employees can’t see through the office door. They have no idea you’re calling customers, ordering supplies, writing a marketing plan, reviewing applications and trying to find a way to cover next week’s payroll. For all they know, you’re taking a nap.

When an employee sees a manager coming in late, leaving early and taking long lunch breaks they think the worst. They don’t understand that you came in late because you attended a 7 am referral group meeting. They have no idea that your lunch ran long because you were signing a deal with a big new client. It doesn’t occur to them that you left early so you could attend a Chamber of Commerce networking function.

Communication with your employees can help them see you’re working as hard as they are. Share your growth projections and help individuals set goals to meet them. Bring key employees to client meetings. Send high performing employees to networking functions in your place. By giving your employees a role in growing the business, they’ll take pride in supporting your success.

20) If you don’t love it, don’t buy it

Confucius said “Find a job you love and you’ll never work a day in your life.”

If you wake up in the morning and dread going to work, your franchise will not be successful. It’s as simple as that.

The beauty of franchising is the endless variety of options – there’s literally something for everyone. You just need to devote the time and effort to figuring out which one will make you hop out of bed every morning, happy to be doing what you love.

21) Use every resource at your disposal

Investing your personal, professional and financial future in a franchise opportunity is a big decision. Use every source of information you can find, and compare the data to make sure you’re getting the whole story.