Lesson 2: The Franchise relationship, some franchising myths.

6) There are some big misconceptions about franchises

Franchise businesses are everywhere, look down any High Street and you will see many you are familiar with and some you do not realise ar e franchised outlets.

•  As a new franchise owner, it is not a matter of making the initial investment, opening your business with new employees, some at entry salary level, and then going absen t on long holidays expecting the business to fend for itself.

•  As a new franchise owner you have to be married to work, at least until the business shows a decisive profit trend.There will be many problems to solve, even the best known a nd successful types of franchises need time spent on them.

•  Dedication by all operating in the outlet and financial commitment will be needed.

•  Even when both are in place and the new Franchise owners provide their core business knowledge and experience and the pro duct or service is needed in the selected territory ; large profits will not mat erialise overnight.It may take months or years and franchise owners have to plan accordingly.Adequately prepared operating budgets and supporting resources are needed until the businesses become profitable.

•  Just because you have bought into an established franchise network, there is no guarantee of success.The Franchise provides you with an opportunity, a viable business venture ; you provide the skill and endeavour.Many factors come into play in determining your eventual success, your choice of the right Franchise initially, the training provided, the size of the customer base, its economic climate and the work you put in.

•  The Franchis or might help in choosing a location or site for your business but in the end it is up to you.You must know the area.Is the location suitable ; w ill it support the level of activity you need.Are there parking problems for example ? Does the building selected provide the layout and space needed now and in the immediate future ?

D/. Are sufficient and suitable employees always available ?

•  As a new franchise owner, you will need to find conscientious, skilled, customer service orientate d employees to support your day to day operation.They may not be readily available and ev en after they have been set -up in the Franchise, they may feel better served elsewhere and leave .

•  The brand name helps in attracting a proportion of new customers, as well as the national advertising by your franchisor. But as a new franchise owner you will have to prepare your marketing, advertising and promotional campaigns at a local level.

7) Factors that help develop a franchise chain.

• Every franchise owner is an individual business owner, but the whole chain benefits from his performance and the reputation he builds up, it reflects on the product or service provided.Customers expect the same quality across the whole chain.
• A great deal of money changes hands w hen a franchise is bought.The Franchisor's aim is to build the brand image which in turn creates the climate for franchise owners ' success.
• Remember when a franchise is young and has not built up a strong brand image and relatively unknown in the market ; the scope for greater growth is possible.You could be part of that growth.
• Of course if you buy an establish ed franchise through a resale, the existing customer base will bring an immediate cash flow.
• The industry is dynamic, many people who start as workers in the Franchise owner's organisation, progress, switch roles and b uy franchises when they become available.
• Some franchise buyers obtain rights to a multiple location at the start, a master franchise owner; this is often preferred to growing their chain by buying a single unit at a time.
• Some franchise concepts benefit from non-exclusive areas in which to do business.
• Where franchisor advisory councils are working well, franchise owners should use them and become involved in the overall company decision making.
• The Franchising relationship can create such a strong unique partnership that franchise owners eventually become franchisors and lead the ir compan ies.

8) Reducing the possibility of failure.

All business ventures are risky, that's why the rewards of working for yourself a re greater than for an employee.But possible risks must be examined.Low quality of goods or services being provided in themselves rarely ca use early business failure, by and large the products and services do not reach the wider market.

Businesses fail because the owners have made insufficient effort ; they are absent owners.When major problems occur, they f ail to provide the proper evaluation and the direction needed to move forward, because they are out of touch with their businesses.When this happens sadly businesses sometimes f ail to recover.

A w ell- run business created by a successful franchis or has already made these mistakes taken action and moved on.This is why he is profitable and now is extending his operation with you as a new franchise owner.It is this mature business format you are buying ; the map has being drawn up this is what you pay for when you buy the Franchise.

For the Franchis or, he wa nts the system to grow, the brand to be accepted country wide and later perhaps worldwide.If the system has been properly thought out and market test ed and if the Franchise owners recruited put in the amount of effort needed, the ov erall franchise network will grow.

Taking account of external factors, income will be generated within the specific Franchise outlet ; the Franchise owner will become more prosperous, as will the Franchis or receiving increasing royalties.

Before finally selecting the Franchise, take a real hard look at the business area you want to be in a nd where you feel you will be really happy working in.

•  You may have very relevant business to business skills.

•  Do you want to be working through the night or at weekends ?

•  There is a chance here to match your personality, previous experience, future goals and life st yle choices to an opportunity, giving you increased income, security and j ob satisfaction.

Do not be persuaded by the low cost of the initial fee w hen mak ing your final selection.Look for quality in a franchise set-up and its products or services.Go for earnings potential.

The products offered should not always be sold on price alone; look for well made products and services completed on time.

•  Do not join up with a mediocre company.

•  Do not invest in a particular franchise simply on the basis that you can afford that one.

Because a franchise system cover s a large area, information collected can more accurately support the Franchisor's claims of his proven marketing success.

Always keep reality in mind, when face-to-face with franchis or companies, try ing to sell their franchises. The y will always put the best interpretation on the opportunities.

•  Remember you are buying a system, not a franchisor's presentation.

•  For many small franchises, their customers are buying on the basis of a good product and the relationship and reputation you have built up with them.

•  Do not always believe the hype given; it will take persistence, the Franchise 's reputation, client satisfaction, to achieve some of the results, which the Franchisors ' forecast.

•  You need to feel comfortable in your early discussions with franchisors you approach ; do you think a sense of belonging can immerge with any of those you short listed?

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