Category Archives: Should you go into business?

5 Things A Franchisor Looks For In A Franchisee

While in the franchise-buying process, it is imperative that you do your due diligence to ensure that the franchise you choose is a good fit for you, it’s also important to know that franchisors are also looking for a good fit in a franchisee.

Franchisors can be picky about who they work with. After all, it’s their brand reputation at stake! Here’s what they’re looking for, which can be helpful for you to understand to ensure that you align with their criteria.

5 Things A Franchisor Looks For In A Franchisee

Continue reading

7 Advantages of the Franchise Business

happy-businessBusiness owners are happier, statistics show, than people who work for someone else. The reasons for this are not completely clear — usually that question is left to speculation after the report of the research results.

Here are seven great things about being in business for yourself that might be part of the explanation:

  1. Flexibility. Sure, business owners — including franchisees — may work long hours. But they also have a lot of flexibility, whether from choosing the kind of franchise business they prefer to invest in to setting their own hours. Franchise business owners often can work where they please or take off to watch a matinee in the afternoon if they feel like it. Big choices or small, being able to choose can be satisfying.
  2. Passion. “Do what you love,” someone once said, “and you’ll never work a day in your life.” Some credit Confucius, but that seems unlikely. No matter who first said the line, it’s true for many franchisees. They love dogs and spend their days with dogs. Or they love fashion, and build their lives around fashion. Employees can feel the same, but they often have less involvement in the business than owners do, and spend less time doing the fun stuff.
  3. Security. This may seem counterintuitive, but business owners, including franchisees, may have more job security than employees. Your job depends on the whim of your boss, but your business depends on you. If your franchise isn’t performing the way you want it to, you can make changes and turn it around. As an employee, you might have to watch your boss make mistakes and end up out of work.
  4. Prestige. Owning a business may give you a different position in your community and in the eyes of your family than working in someone else’s business. For many franchisees, building a business is a source of pride.
  5. Income. Multi-unit franchisees are not just building a business — in many cases, they’re building an empire. Most jobs have a maximum income level, but a business you own, including a franchise business, has no upper limit. Your income depends on your choices. This can be especially important for people in industries where working hard doesn’t always lead to higher wages. Owning a cleaning business is very different from working as a cleaner.
  6. People. You pick the people you work with when you own your own franchise. The staff are chosen by you, you pick the kind of customers you want, and you pick the franchisor and franchise community, too. In a job, you may dislike your boss or find your coworkers difficult, and you certainly can’t pick the customers you choose to work with.
  7. Creativity. Franchises have systems and rules that franchisees must work within. But as the owner of a franchise, you can have a great idea within those parameters and go with it. As an employee, you have to pitch your ideas, and someone else makes the decisions.

Franchise Owner Happiness: New Research

It’s been clearly shown and it’s widely known that business owners are usually happier than employees. More detailed research looks more closely at the factors that make business owners happier.

A Wall Street Journal review of 21st century research wasn’t focusing on franchisees, but experience shows that the factors the researchers found apply just as much to a franchise as to an independent start up.

What motivated the decision to go into business?

The researchers found that many people go into business in order to be independent, and that’s no surprise. You might be surprised to discover, though, that this doesn’t always work out as a motivation for independent start ups, any more than it does for franchisees.

Entrepreneurs in general value freedom and like to be their own bosses.Many find that they have overestimated their freedom, though. Franchisees have rules and systems to follow which are set by their franchisors. Start-ups have to answer to their financial backers, their partners, industry regulations… and their customers. The idea that being your own boss means complete freedom often turns out to be a myth. Business owners often value freedom more highly than the average guy, and the requirement to go and open up at the time you painted on the door can feel like a burden to some entrepreneurs.

But they can also feel dissatisfied because they don’t get the positive feedback they used to get when they were employees. Being a star employee is great when you’re getting your picture on the wall or being given a promotion. Bosses don’t get that.

And entrepreneurs often don’t realize that they care about that feedback. Positive feedback from customers can take the place of those “Employee of the Month” plaques, of course, but business owners may hear more complaints than they did when they were staff members. Those who went into business mostly for the sense of freedom my not be as happy as those who had a different reason.

How’s the money?

A study from 2008 found that most entrepreneurs were happy with their choice to go into business for themselves: happy answers dominated on a long list of questions. But income showed the highest level of satisfaction: 4.73 out of 5.0. Next up was security, at 4.67. Flexible schedules and creativity were both over 4.0 on average, but just barely: 4.03 and 4.05 respectively.

So entrepreneurs who invested in their own business were happiest with their incomes. But there were some people who weren’t as satisfied. People who had plenty of capital to begin with tended to be less satisfied with the income from their businesses, for example. That may be why the millionaires who have enough personal wealth to invest in a franchise like McDonald’s may express less satisfaction with the return on their investment than people in more modest franchises.

Are the results up to date?

Most of the studies mentioned in the WSJ article were from five years ago or more. Gallup has done a more recent study that might confirm the research review’s results. They found that satisfaction with owning a business dipped during the Recession, when some of the studies WSJ referenced were made. Small business owners have rebounded, though, with more than half counting themselves very satisfied — and being their own boss topped the list of satisfying factors.

Franchise Success: Who’s Responsible?

success or failure

As you research franchise business opportunities, you have some specific questions in mind. Some may be unique to you, but nearly everyone wonders, “Will I succeed? Will I make money? How much will I make?”

Success and security are on your mind because you’re making an investment. You’re choosing how you will spend your time and earn your money for many years into the future. Franchise businesses — like independent start ups and most jobs — don’t offer a guarantee of success and security.

They offer you a chance to succeed.

Franchisees look into the success rates of franchises in general (higher than independent businesses) and they look into the success rates of specific franchisees. They talk with current franchisees who have succeeded and they try to determine whether a particular franchise will succeed in their market.

But when you get right down to it, you — the franchisee — have the most control over your success, because you are responsible for the most aspects of your franchise’s success:

  • You’re responsible for deciding whether franchising is right for you. If you like to do things your way and have trouble following rules, it probably isn’t. If you appreciate the chance to shine within a system, you’ll probably find franchising satisfying.
  • You’re responsible for doing the research needed to make the right choices. Too many franchisees pick a franchise because they loved it as a customer. Being a customer is not the same as being a franchisee.
  • You’re responsible for making the right choice among franchise opportunities. Franchise businesses are not all alike.
  • You’re responsible for making sure you have the resources you need to succeed. Underfunded franchises can have a hard time making it through the start up phase. If you can’t commit the time and attention, you may not be making the right choice.
  • You’re responsible for following the franchise system. Many franchises would be successful if they did what their franchisor expects them to do.
  • You’re responsible for putting in the time and money to get started. Talk with current franchisees and find out what they put into their franchises. Don’t imagine that you’ll be able to do it with less time and a smaller investment. You’ll have to do a lot of training, marketing, and otherwise setting up before you hang out your “Open” sign.
  • You’re responsible for hiring the right people. Unless you choose a franchise with no employees, you’ll have to make good choices when you hire, and manage your people once you’re hired them.
  • You’re responsible for capturing and using the numbers needed to keep your franchise on track toward success. Franchising is not a mechanical toy you can wind up and watch. You’ll have to stay on top of operations.
  • You’re responsible for making the day to day decisions that help you reach your goals. Some questions are not answered in the handbook. You must be prepared to make some calls.
  • You’re responsible for being aware of and responding to the changes in your market or your industry that will keep your franchise successful. Times change. Even the most perfect system must respond to market realities and changes in consumer behavior.
  • You’re responsible for working well with your franchisor. Franchises are a distribution system. Working well with your franchisor is a must.
  • You’re responsible for getting the most out of the franchisee community. Many franchises have strong communities of franchisees who support one another. It’s up to you to join in.

Who’s responsible for your success as a franchisee? Fortunately, you are.