Lesson 4: What's needed to be a good franchise owner

Contents:

• Introduction
• Do you have what it takes to be a businessman or businesswoman?
• Overall factors that will influence your chances of success
• Listed below are the key tests of a potential franchise owner's suitability 

1) Introduction

As you would expect, not everyone has entrepreneurial skills and likewise not everyone will make a good and successful franchise owner. An entrepreneur and a franchise owner are not the same. There are some familiarities, a franchise owner is also responsible for the business 24 hours a day, but there are scenarios within a franchise that will make even the most controlled entrepreneur react.

This lesson will help you appreciate their differences and their similarities and help you evaluate your suitability to franchise life, before you commit yourself to that attractive franchise business.

As a keen potential franchise owner studying lessons 1, 2 and 3, has helped you realise that if you want to run your own business, being part of a tried and tested franchise system, gives you a greater chance of success, then coming in and starting from scratch.But before you invest your hard earned capital there are still a lot of avenues to be explored, many questions to be asked.

• This lesson covers the very important area of self-appraisal, after you have completed it, answer the self- analysis questions conscientiously and then you will know with a good degree of certainty that franchising is for you.
• The experience d Franchis or has a very good idea of what he will be looking for in his new franchise owners ; this comes from his past experience and the knowledge of what he has decided will be needed for success in his new outlets.
• You will be able to sensibly match your skills, experiences and knowledge to that general criteri on.
• If areas emerge where you feel that you might have some deficiencies ; you will then be able to focus on them.
• This will give you the opportunity to seek advice, help, and the training that will reduce the affect of these perceived deficiencies.
• Lesson 5 explains, in some detail, the other pla yers in the industry who can help you further.

2) Do you have what it takes to be a businessman or businesswoman?

Some characteristics are prerequisites for launching a business, whether you opt for a franchise or decide to operate independently.Owning and operating your own business takes ;-

• Motivation.
• Maturity.
• Money.
• Knowledge and experience.
• Strong family support.
• Tenacity.
• An even temper.

Motivation
Motivation the 'fire in the belly ' that feeds the will to forge ahead no matter what.It is commonly found in people who have worked hard on a job, but never quite felt fulfilled, people who find themselves saying 'If I could own my own pla ce, I'd.? That desire motivates people to start their businesses and stick to them through good times and bad.

Maturity
Motivation gets you going, maturity helps you persist as you work long hours without complaining, get ting along with your personnel, controlling money responsibly and handling crisis with patience and good judgment.All these challenges take maturity, the wisdom to except the hard work and occasional setbacks it takes to make your dream a reality.As a business owner you must be a dreamer and a realist.You need to set goals and plans to achieve your dreams, while being realistic and planning the attainable.You need to accept your limitations and short-term handicaps and hunt for ways to grow beyond them.That's maturity.

Money
Of course you need to be solvent and have the ability to create income and control costs but as you will see in Module 2 Banks looked favourably on well thought out franchises.

Knowledge and experience

• To gain the confidence and loyalty of your staff and customers, you must provide a quality product or service in a first-class manner at a competitive price.
• That means knowing your business and your industry inside out.
• But that does not mean you have to open a business in a field you know and possibly dislike, just because you think that is all you know.
• Knowledge can be gained and gained well.
• You might very well elect to open a business around a hobby or field of interest in which you have experience.
• You cannot be expected to be an expert in every job, hiring qualified trades men and experts is another way to get that required know-how.

Strong family support

• Strong family support is invaluable to a franchise owner. particularly when the money invested by the family helps finance the business.
• You need to build support for your idea among your family members, whether they eventually come into the business or help you from the outside.
• Your family needs to understand that your business will come first for several years.
• They must realise, that your hours will be l ong and irr egular, that you may well miss meals and social events and that in general, you will have less time for family members.
• The family needs to know that your income will not be steady.
• You will not be paid until all other expenses had been met.
• Some times even during good months, you will have to use your business income to build cash reserves.
• A business is not a bank account, which can be accessed at will.
• Make sure everyone is willing to live with the conditions of self-employment, before you embark on your new venture.

Tenacity

• Seeing things through to the end is a must for any business owner or franchise owner.
• When a job needs to be done, when an employee needs feedback, or a customer need s special attention, you m ust see it gets done.
• When faced with setbacks, you must draw on your experience and maturity to make the best possible business decisions.
• It takes tenacity and determination to weather the bumps on the road to success.
• Some months they may be little money coming in.

An even temper

• A business owner or franchise owner needs to be able to make decisions logically and with good judgement.
• That means handling pressure, conflicts and crises calmly and thoughtfully.
• If you are impulsive, you may make poor decisions.
• If you are hot headed or have a quick temper, you may alienate customers and employees alike, putting your business at risk.

3) Overall factors that will influence your chances of success

1. Training and the ability to learn
2. Ability to absorb and work the system
3. Personality traits

1.Training and the ability to learn.

Training provided by the Franchisor
Franchisors know, to attract new customers to their proven system, depends on how well their new owner has been trained. They invest significant time and money in their training programmes so that they can pass their concept successfully on. Franchisor training does not cover everything; their training will cover the 'nitty-gritty' of their particular service system. However their Franchisor may well leave the general business and management principles to their new franchise owners.   So be wise, take a personal skill inventory. Evaluate your level of competence in such fields as finance, marketing, accounting, human-resource operations and advertising. Know your limits and when you reach them, find a way to expand your knowledge.

Can you benefit from what is available?
Joining a franchise system and using the support available can be very beneficial. Help is immediately available from experts in the Franchise business, e.g. trainers, site specialists, financial providers and operations people. You can also call upon other trained franchise owners, who have a good deal of wisdom to offer. You can develop solid business friendships with other franchise owners at franchise meetings. These friendships can last a lifetime, because in all likelihood, you will run into them from time to time throughout your franchise career.

The ability to live with the Franchisors game-plan

Franchisors will provide what they see as their blueprint for success, based on their current and past experiences. These blueprints are the result of years of making mistakes, correcting them and making sure they are not made again. You plan to invest money in a system that has worked in other areas. Your Franchisor will assist you in delivering that successful system at your selected location. People often say that in Franchising you are 'in business for yourself but not by yourself.' But this benefit is double-edged. As a franchise owner, you are not alone.W hen difficulties ar ise in the Franchise, there are professionals who you can consult.On the other hand, because you are purchasing a system that is already in place, you will not be able to significantly change it.That would be a problem f or an entrepreneur whose only experience has been running a stand alone business True entrepreneurs love to innovate, to find new niches and ways of doing things .Franchise owners who continually question and query, want to change the product line or product colour or do things their own way, they would not be happy in a franchise system.A happy franchise owner wants to follow the game-plan that is in place and does not mind taking directions. When he or she sees room for improvement, the Franchise owner speaks up but is not disappointed when the s uggestions are not implemented. A franchise owner needs to be able to accept things as they are.If you are a person who spends lots of energy on things, as you think they should be, you may not be cut out for franchising.

The ability to tolerate differing points of view and except consensus

Franchise systems are rife with opposing viewpoints. As a franchise owner, you will have a chance to express your opinion, but so will everyone else.It takes patience and tolerance to consider all sides of the discussion and then live with a consensus decision.While it may be the best decision for the Franchise network as a whole ; it might not be the one you would have made on your own. 

A high level of trust in the Franchis or

To succeed in franchising you need to believe in and support your franchisor's systems and policies.Franchisors make money from royalties, so it is in their best interest to help franchise owners build the ir largest possible business.A good franchis or will search constantly for ways to help you achieve that potential, often developing new approaches or policies for you to implement.As a good franchise owner, you will have to accept policy changes in the spirit they are intended.

The ability to communicate with the Franchisor's Head Office

Franchise owners should communicate often and openly with the specialists at the Franchisor's headquarters.The more franchise owners that share their experiences, the better Head Office can offer ideas and assistance. You will need to work closely with their field consultants w ho can share their br oad knowledge of how other outlets are operating.  They will be aware of problems in other franchise units, they will know the level of profits they are making and the growth they are achieving.

The Franchise owner's ability to live with a Franchise Agreement and abide by the operations manual

•  All franchise owners in a system must follow their Franchise Agreement and operations manual as they conduct their business .Living by the same rules means you and your colleagues are building the system using the same blueprint.However now and then, some franchise owners feel a little stifled by 'always going by the book', especially when it appears to prevent a franchise owner from implementing a great new idea.It takes controlled persistence, to follow the rules and conf idence to try to change the system from within.The system grows by adopting good ideas and discarding bad ones.It may take time; a great new idea may eventually be adopted, if it can be seen to benefit the entire system, not just a single outlet.

Being a happy owner in a franchise system requires a personality that enjoys working as part of a team. If you do not like teamwork, a franchise may not be for you. Succeeding in a franchise system also requires adhering to an operations manual and established procedures. If you are the type that resents following a set programme, would rather create your own; you may not be as happy as those who enjoy the rewards gained from going by the agreed procedures and instructions. If you think your favourite phrase will be 'When I run my franchise, I am going to do things this way.' You may want to give franchising a pass. Even developing business friendships is hard for some people. Franchise owners need to develop and nurture cordial and respectful relationships with other franchise owners and the Franchisor's area managers, who help franchise owners carry out the programmes as laid down. These relationships are motivated by the mutual desire to operate a system as profitably as possible.

The ability to be corrected and take it gracefully:-

It is in the Franchisor's main interest to make sure everybody is following the game plan and staying in line.  If the Franchisor thinks you need to implement the system more diligently, or believes you are ignoring certain practices or even taking your franchise in another direction, you will soon hear about it. If you have a hard time accepting suggestions or criticisms, franchising may not be for you.

4) Listed below are the key tests of a potential franchise owner's suitability

• Are you an independent self-starter, ready to take more control over your professional destiny ?
• Are you willing to make a long-term commitment, managing operating and growing your business ?
• Will you be truly passionate about your business ?
• Will you be willing to make sacrifices to make the Franchise successful ?

5) Self assessment  

There are other considerations that a potential franchise owner should carefully consider. List down, with the help of others what you think are your natural aptitudes and particular skills th at you will bring to self-employment.

General

• Are you self reliant ?
• Are you best, when faced with mental rather than physical tasks, or perhaps you're happy with both ?

These are the topics for your self-assessment ; examine them carefully, give honest answers, you may feel there are areas at present that you would like more help and training. Remember help is at hand within the Franchise industry from those who have the knowledge, skills and experiences ready to help you move on.

Will you suit the Franchise concept ?

• When you start, will you have the sufficient support in place to manage your business ?
• As a new franchise owner you have less time for your family, most certainly in th e early months.
• You will need their support; they may even be able and keen to help in the business.
• Your business friends ' interest and support is also well worth cultivating at this time.
• Have you asked your friends and relatives for their respected opinion as to your current emotional, mental and physical suitability to run your own business ?
• On careful reflection would you have seriously considered self-employment, if franchising was not on offer ?
• In the years ahead, having made the investment in money terms and the necessary work commitment, will franchising be one of your success stories ?

The selection process

•  At this time do you have sufficient knowledge of the Franchise industry as a whole? Will you be prepared to conduct independent research into the particular industry that you would like to enter? •  Will you make a determined check to see that the product or service you are going to sell has a market in the territory being offered a nd at the price levels you will have to charge? Have you or your partner who will be running your business, had pas t business experience that will be helpful in certain franchises ? Before you find a nd select your franchise, ha ve you or your partner considered finding temporary employment in a similar outlet ? •  Doing this could provide good hands on information.  To help in the process will you look for an experienced franchise accountant ? Module 1 Lesson 6 explains their functions.

At a later stage, a composite business plan will be needed, to accompany your loan application to your Bankers and for internal monitoring of performance.More information on the content and the presentation of franchise business plans can be seen in module 2.

Personnel and management skills

Do you have at least a working knowledge of business, perhaps from past employment ? Already you possess valuable skills, are you willing to learn new skills and develop operating procedures and adopt strategies set by your franchis or ?   Are you happy with the I.T. that the Franchis or w ill set up in the Franchise ? Will you take on board their book-keeping software, point of sale and inventory management packages ? There may be more technical information, specific to the Franchise, which you will need to understand.

•  How good are you at selecting and supervising people, are you well organised, can you delegate? You should be practical and sensible in your approach to franchising.  You will have to recruit staff and manage; th is might create a level of stress that you might not be able to handle ?   Will your age and health history, allow you or your success or sufficient time to recover the initial investment costs and so make the whole exercise worthwhile ?  On the other hand, are you too young and inexperienced to run an enterprise ?  Selling will be involved, could you be a worthwhile salesman ; perhaps with a more extravert approach, plus do some extra s ales training ? Handling staff firmly and fairly is a must, how do you feel on this score ? Do you appreciate, that fairly quickly you must become the leader and trainer to your staff and be their respected front man or woman ? Specialised courses are available to develop your personnel skills.

The working relationship with your franchisor and working conditions in the Franchise

• As well as the obvious financial sacrifices a new franchise owner has to make at the start; will you be willing to work during the night, at weekends and over holiday periods, if this is the norm in your franchise?
• Within the context of the Franchise, can you follow someone else's rules, when you are sure that there is a better way ?
• Do you realise that you will have to be sympathetic to the Franchisor's attitudes and methods of training ; telling you how to run your business from He ad Office or through his area representative in the field ?
• Will the disciplines needed within the Franchise network irritate you in the years ahead ? Will the franchisor's authority eventually become irksome ?
• Can you trust the Franchis or to work entirely for everybody in the Franchise ?
• Will you be willing to use the advertising promotional material provided by the Franchis or, or will you start to insist that your franchise solely uses your much greater creative abilities ?

Personal skills and traits

• Do people take to you ?
• Are you happy working in a team scenario ?
• Are you professional in providing accurate written communications ?
• Are you good at passing on instructions verbally ?
• Does your background and character provide you with some special traits that could be successfully used when you own your own business ?

Fitness and suitability to undertake the purchase of a franchise

• How fit are you ?
• Have you or your partner, w ho is going to help you in the Franchise, had a recent physical examination ?
• On a more personal note are you both able to handle the emotional strain involved in operating a franchise, the long hours and the tedious administration th at will be needed ?
• Do you both like working with others ?

The long-term scenario

Do you have a capable and willing person to take over if your personal circumstances change ?If this new franchise is some distance from your present home, have you considered it may not be sensible at this early stage not to sell your present home until the project is up and running ?When you start to examine the industry of your choice and identify the Franchise of most interest and start to build up a relationship with the Franchis or ; do you think that this good feeling will remain over several years, perhaps even to your retirement ?Do you appreciate that if you have previously enjoyed a high level of corporate 'perks ', they will be badly missed, i.e. loss of job security, a guaranteed salary, a regular and fixed work schedule, perhaps the benefits of private health insurance ? However as a new franchise owner, the level of your self-reliance will help you work on, without th at previous corporate support.What do you need from the Franchise, can you achieve your aims, i.e. greater job satisfaction, growth in the capital th at you have invested, a larger income tha n you received when you worked for someone else ; or are you just furthering an interest, a hobby ?Young or old, decision making will be crucial, when things do not turn out as expected, do you have the nerve and the will power to survive the initial losses as a business builds up ? In the years ahead, having made the investment in money terms and the necessary work and that commitment, will franchising be one of your success stories ?

6) In conclusion

Obviously all prospective franchise owners will bring differing and various attributes to their new franchises. But all should have a positive work ethos.Before prospective franchise owners can move forward there will be still some crucial questions needing positive answers, particularly regarding finance.Banks take a very favourable view in their lending approach to well thought out franchises and good prospective franchise owners.

Module 2 develops key themes involved in the cost of buying a franchise and the finance available.

If you have made honest answers to the points raised above, you can move forward, knowing that extra help will be on hand through your franchis or, other franchise owners and through franchise consultants.

Franchise Development Services Limited
( http://www.fdsfranchise.com )

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Self assessment question

Next lesson..

Lesson 5:
Key supporting players in the industry.