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21 Secrets to Franchise Business Success
 

21 Secrets to Franchise Business Success

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FREE Franchise Consultation: Using our customized model for research, we’ll present you with 3 choices of franchise concepts to suit your tastes. This meeting will take place within 30 days of our ...

FREE Franchise Consultation: Using our customized model for research, we’ll present you with 3 choices of franchise concepts to suit your tastes. This meeting will take place within 30 days of our first consultation. Guaranteed. http://www.truittfranchising.com

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    21 Secrets to Franchise Business Success 21 Secrets to Franchise Business Success Document Transcript

    • ==== ====FREE Franchise Consultation: Using our customized model for research, we’ll present you with 3choices of franchise concepts to suit your tastes. This meeting will take place within 30 days of ourfirst consultation. Guaranteed.http://www.truittfranchising.com==== ====1) Evaluate your tolerance for riskOpening a new business is a scary prospect. Theres a lot of personal, professional and financialrisk to consider. Its natural when contemplating such a profound step in your career to look atways to manage your risk and increase your chance of success.The Small Business Administration conducted a survey that found 62% of non-franchisedbusinesses failed within 6 years. A separate study by the United States Chamber of Commercefound that 97% of franchises were still open after 5 years.The research conducted by these independent third party organizations clearly demonstrates thatchoosing a franchise business carries significantly less risk than starting a business on your own.2) Work with what youve gotMaking a list of your strengths is easy. But when launching a business, its also important to makean honest assessment of your weaknesses.Before you get to work selecting a franchise, take the time to develop a list that honestly depictsyour strengths and weaknesses as a potential business owner. Then use this profile as a tool tohelp with the decision making process.Ask franchise owners questions about the duties they perform, and compare the job requirementsto your profile. If the business has the potential to be a good fit, the skill sets required to run thebusiness will either be skills you already have or skills you can learn quickly. If this is not the case,its best to keep looking.If a certain aspect of a franchise has a steep learning curve but the business is otherwise a greatfit, you may want to consider hiring someone experienced with that position. If this is the choiceyou make, be sure to include their salary and benefits in the financial business plan.3) Remember to run the businessMany potential franchisees make the mistake of thinking theyre limited to buying a franchise intheir 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 difficultto make, and are tempted back onto the floor to do the job theyre familiar with.The problem with this is that you grow the business by running the business, and what afranchisor wants to see on the bottom line is growth. A business owner needs to be outnetworking, marketing and interacting with customers. If theres too much work on the floor of anauto repair franchise, then the owner - even if hes a highly skilled mechanic - needs to hire moremechanics.Basic business skills are transferable to any franchise. If your current position involves universalroles like sales, marketing or accounting then your franchise options are practically unlimited.4) No business is recession-proofTheres no such thing as a business that cant be impacted by a faltering economy.There are, however, certain industries that are considered recession "resistant." These aregenerally products and services people cant do without no matter how much theyre cutting thebudget.The good news is there are hundreds of great franchise opportunities in recession resistantindustries. The following are just a few examples:Top recession resistant industries:Food · Automotive · Healthcare · Medical·Clothing ·EducationRecession resistant franchise industries: Fast food restaurants·Automotive maintenance, partsand repair · Weight loss and fitness · Resale shops and discount (dollar) stores · Education(tutoring) and child care5) Objectively evaluate professional advice from personal sourcesFriends and family have your best interests at heart, and their advice comes from a place of loveand concern for your well-being. No one would suggest making the personal, professional andfinancial 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 ifyou 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, ofcourse you will carefully weigh all the advice youve received. The key is to rely most heavily onthe advice offered by industry professionals.6) Theres no such thing as a free lunchThere 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 yourprofessional 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. Thatmeans they are naturally only going to show you options theyll get paid for. And in the case ofhigh profile franchises that may offer them 2 to 4 times the average commission, theres a real riskthey may steer clients to those businesses whether theyre a good match or not.These broker services may have access to detailed data on several hundred franchises and theycan be a great source of information. Just be cautious about their recommendations, and get asecond opinion before investing your money.7) Tune out the hypeNever before was the adage "if it sounds too good to be true, it probably is" more applicable.Youre going to hear a lot of hype - good and bad - while assessing potential franchiseopportunities.Between marketing blitzes and human nature, its easy for success stories to spread like wildfire.Think about the guy who lost weight eating Subway - that story is so pervasive its become almostimpossible to separate the allegory from the restaurant in the publics perception. The hypesurrounding that marketing campaign will have an impact on potential Subway franchisees for theforeseeable future.Its also natural for people to look for something to blame when things go wrong. Because of thisthere 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 theattention-grabbing outcomes.No one is suggesting you completely ignore these stories, because hidden beneath the hype thereare likely valuable lessons to learn. Learn from them what you can while keeping in mind whatthey are: unique situations with complex back stories that probably have no bearing on yoursuccess whether or not you choose the same franchise.8) Look beyond the big brandsSometimes its easy to forget there are thousands of franchise opportunities out there, becausethe big name brands get all the attention. When youre in the early stages of your search, its agood idea to bypass the overblown marketing of the huge franchises and make an effort to learnabout the "no-name" franchises in your industry of interest.There are quite a few advantages to lesser known franchise brands. For instance, they are oftencutting edge concepts that can get a lot of marketing attention. Lesser known franchises haventyet saturated your local market. And theyre usually less expensive to start up, which means lessfinancial 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 youre looking forin a franchise, and theres nothing wrong with that. But if youre not interested in being anotherinstantly recognizable box in another strip mall, then a no-name franchise might be for you.9) Look beyond the price tagJust because a franchise is more expensive does not mean it will be more successful.Its important to evaluate every aspect of a franchise - financial projections, monthly franchisefees, 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 qualityof the business opportunity.Once you narrow down your preference to a particular industry, conduct due diligence on 2 to 3franchises in that industry. Gathering adequate information on several comparable franchises willallow you to make an informed decision.10) Comparison shopOnce you decide a franchise is right for you, keep looking.If you decide to purchase a franchise of Coffee House A, then its time to start looking for reasonsnot to buy it. Build a list of questions, and then go talk to owners of Coffee House B and CoffeeHouse C.Be blunt - ask the competing franchise owners why they feel their business is better than CoffeeHouse A. Ask them what made them choose B over A and C. Ask them if they would recommendyou buy the same franchise, and dont stop digging until youre clear on the why (or why not) oftheir response.Build a spreadsheet comparing the details of the franchises. Include data such as the benefitsoffered, financial commitment required, estimated monthly expenses, commercial leaserequirements and franchise fees.If your franchise preference stands up to the scrutiny, then youre on the right track.11) Contact current and former franchiseesThe best way to find out if a franchise is right for you is to go behind the scenes and ask a lot ofquestions.Before making a buying decision, prepare a list of questions. Contact at least five currentfranchisees and make an appointment to discuss your interest in the business. Whatever else youdiscuss, 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 allowyou to observe the daily operations of your potential future business without committing topersonal financial risk.
    • Contact several separated franchisees to learn about their experience. Understanding theirreasons for getting into - and out of - the franchise can impact your decision.12) Do your due diligenceAll franchises are not created equal, and its 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 necessaryThe purpose of due diligence is to reduce your risk. All the steps are necessary, but the mostimportant step is interviewing and job shadowing a current franchise owner.Some franchise owners will allow potential franchisees to spend weeks at their business learningthe ropes. They may be willing to share detailed financial data, and can confirm or refute claimsmade by the parent company. A franchise owner can answer questions the franchisor may belegally bound from discussing. You may be able to make assessments about your ownmanagement style or potential business location by observing theirs. Visiting operating franchisesin the course of due diligence may be the single best method for evaluating your potential successwith a franchise opportunity.13) When the time is right, hire a legal and financial teamGetting expert advice on the legal and financial aspects of a potential franchise purchase isessential. Some buyers skip this step to save money, but this is not the place to cut corners. Therelatively small fees a lawyer and accountant charge pale in comparison to the enormous financialloss youll 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 andpotentially counterproductive in the early stages of your search. Its crucial to remember whenseeking 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 everyfranchise that catches your eye. This onslaught of numbers can cloud your judgment, particularly iftheyre 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 suchan early stage with a legal advisor who doesnt understand your personality, lifestyle andprofessional preferences can be detrimental to your search. You could end up inadvertently beingtalked out of the perfect business.Waiting to bring in legal and financial advisors until your franchise choices have been narroweddown dramatically is not just cost effective. Its the logical way to use the teams expert advice toyour best advantage.14) Feel the fear and do it anywayThe best way to manage your fear of buying a new business is to manage your risk. The best wayto manage your risk is to learn everything you can, then proceed according to what youvelearned.Start the process with no intent to purchase. That removes the chance of getting so excited aboutbusiness 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 begrateful for what youve 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 tofind the perfect franchise, but your efforts are not wasted. By actively engaging in the search,youve made yourself familiar with the process. And theres no fear in the familiar.15) Go it aloneBusiness partnerships are appealing on the surface because the idea of splitting costs, liability andworkload is tempting. But its nearly impossible for any two individuals to work together as muchas 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, its crucial todefine the roles each partner will play well in advance. If at all possible, try to structure thepartnership 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 yourattorney.16) Lease, lease, lease
    • Most franchises provide detailed specifications on the type of commercial real estate required tolaunch 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 requiredto purchase a property is better reserved to fund operating costs for the first few years. Its alsopreferable to sign short lease terms with options to extend rather than committing to a long leaseterm.Because many commercial leases include taxes and assessment fees buried in the fine print thatcan cause financial problems for your business, it is very important to have your attorney reviewany commercial lease before you sign it.17) Dont forget youve got to eatOne of the most common mistakes people make when working up a financial business plan isforgetting 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, andeverything a new business makes could go right back into making it stronger.The reality is weve all got bills to pay. Its important to be honest and thorough when estimatingthe salary the business will need to pay you. Cutting yourself short will create enormous problems,especially if your fledgling business cant afford to give you a raise yet.This is one area where decisions you make for the business directly impact your personal life. Thefranchise isnt going to do you much good if your heats 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 optionsIn the current economic climate, strict lending standards are making it harder than ever to get acommercial loan issued. When loan approval is a problem, it is worth considering your 401(k) orIRA as a resource for purchasing your business.These self-directed retirement structures do permit individuals to actively invest their retirementfunds into a business without taking a taxable distribution or incurring early withdrawal penalties. Asuccessful use of this financing method offers the chance for a greater potential return on yourmoney 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 exampleIf youre 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 soonthere wont be any left to count.Even the most diligent business owners may forget that employees cant see through the officedoor. They have no idea youre calling customers, ordering supplies, writing a marketing plan,reviewing applications and trying to find a way to cover next weeks payroll. For all they know,youre taking a nap.When an employee sees a manager coming in late, leaving early and taking long lunch breaksthey think the worst. They dont understand that you came in late because you attended a 7 amreferral group meeting. They have no idea that your lunch ran long because you were signing adeal with a big new client. It doesnt occur to them that you left early so you could attend aChamber of Commerce networking function.Communication with your employees can help them see youre working as hard as they are. Shareyour growth projections and help individuals set goals to meet them. Bring key employees to clientmeetings. Send high performing employees to networking functions in your place. By giving youremployees a role in growing the business, theyll take pride in supporting your success.20) If you dont love it, dont buy itConfucius said "Find a job you love and youll 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. Itsas simple as that.The beauty of franchising is the endless variety of options - theres literally something foreveryone. You just need to devote the time and effort to figuring out which one will make you hopout of bed every morning, happy to be doing what you love.21) Use every resource at your disposalInvesting your personal, professional and financial future in a franchise opportunity is a bigdecision. Use every source of information you can find, and compare the data to make sure youregetting the whole story.Jim Cerny is a Chicago area entrepreneur and founder of http://www.efranchisereview.com Withmore than 20 years business experience, his current focus is helping new business owners findsuccess.Article Source:http://EzineArticles.com/?expert=James_Cerny
    • ==== ====FREE Franchise Consultation: Using our customized model for research, we’ll present you with 3choices of franchise concepts to suit your tastes. This meeting will take place within 30 days of ourfirst consultation. Guaranteed.http://www.truittfranchising.com==== ====