Franchise businesses provide several advantages to those who leverage them, particularly as more and more corporations are downsizing, outsourcing or automating critical processes and displacing middle management.
Two of franchises’ key benefits that are hard to find together in traditional businesses are the security of a large institution with buying power, resources, and at least a semi-established consumer base, and the freedom and autonomy of being your own boss (to a certain extent). As the owner of a non-franchise small business, the average failure rate is higher and you have to earn all of your brand recognition from scratch. Building brand equity isn’t impossible, but it’s a long-term process and requires a significant investment to achieve.
Before you make the investment in a franchise business, however, you should have a clear picture of the key differences between a traditional small business and a franchise business.
Franchising is Not a Free-For-All
Although the franchise business model comes with distinct benefits to the franchise owner, it does come with risks and limitations. Franchises are inundated with rules, and before you start thinking that you’ll be able to run your new business operation from a yacht, most franchise contracts require that franchise owners spend virtually all of their time managing the business.
Parent companies have strict requirements, and if you’re not going to be able to adhere to them without someone physically in your storefront, looking over your shoulder, a franchise isn’t right for you.
Ideal Qualities in a Franchisee
Franchisors owe the industry of franchising the due diligence of turning down potential franchisees who aren’t qualified (and it also helps their bottom line); by the same turn, if you’re seriously considering writing a check to a franchisor and being the proud new owner of a business-in-a-box, you should take some personal inventory of your strengths and weaknesses so as to determine if you’re made of the right stuff to build a successful franchise operation.
Here are a few quick facts about what it takes to be a great franchisee:
- The skills and confidence to be a business owner and operator. You’ve probably run a business before, and are eager to again — you just don’t have a unique product to take to market. A franchise provides that product and infrastructure so you can take the reigns of a machine that’s already been well-oiled.
- Experience from having been heavily involved in the logistics, operations, and/or marketing of at least one small business. Military veterans and salesmen also perform well as franchisees.
- Passive and amiable personality types who focus on cooperation over conflict or competition also perform better in franchisee roles than do those who might be a little more aggressive in their tactics. Put bluntly, franchisees who are able to go with the flow and aren’t frazzled by a certain degree of franchisor oversight tend to be more successful, and stay in the industry longer.
Don’t Rush into a Franchise
Before you write a check for $35,000 (a typical franchise fee) or take a loan out for the remaining $50,000 – $150,000 you will need to cover start-up costs, take the time to conduct exhaustive research on franchising.
Consider all of your options when choosing the right franchise option for you, read some of the top titles on franchising. Spend time with an entrepreneurial coach or a consultant with extensive franchise experience. If you skimp on the process of researching which franchise to commit to or determining what kind of franchise would best suit you, you’re guaranteeing some sort of failure or clunkiness.
Remember, you’re going to dedicate at least the next decade of your life to managing the details and the big picture of your franchise operation, working up to 60, 70, or even 80 hours a week in the first few years while you find your footing. Make sure you choose a franchise opportunity that you will be passionate about.