Why buy? Weigh everything in the franchise package
Why buy? Weigh everything in the franchise package
by Geoff Batchelder
Should I purchase a franchise or go it alone with a business? This is a question every potential franchisee should think long and hard about—along with the franchises being considered—before deciding whether to buy.
Most of the potential franchise buyers I speak with think the answer is name recognition. While that’s something to be aware of, it’s not the most important benefit that a franchise can provide. Systems, training, support, and market development will often have a much bigger impact on your potential success than name recognition.
First, let’s talk about systems. Look for operational efficiencies that can speed your time to market, saving you money along the way and starting the flow of revenue in a time frame that you could not attain all by yourself. This benefit alone can offset the franchise fee.
Is there a “project launch” road map of steps to follow from the day you sign the franchise agreement to the day you hang out the open-for-business sign? This can be a huge benefit in helping you avoid costly, time-consuming mistakes.
Are there vendor arrangements in place? Often, the pricing received through a franchise offers a discount you could not get on your own.For instance, The Flying Locksmiths and WaveMAX Laundry have major purchasing discounts in place and pass the entire discounts through to the franchisee. Having these arrangements in place, rather than needing to line up your own suppliers, can be a huge time savings
even without a discount. How about service offerings that will benefit your customers? A call center to handle inbound calls and scheduling is a huge benefit for your customers and something you can’t provide on your own.
As for training, make sure you understand the topics to be covered. Assess the training. Once it’s completed, are you confident that you’ll possess the knowledge you need to be successful or on your way to success? Do different subject-matter experts deliver various parts of the training? Do you receive both classroom and on-the-job training?
Support may be even more important than training. Be sure to ask existing franchisees about support. After training ends, are the franchisees left on their own, or is there a steady stream of ongoing support and mentoring? Granted, different business models will require varied levels of support, so it’s not always an apples-to-apples comparison, but make sure the franchisees feel that they’re provided with all the support they need to continue growing their businesses and that any problems are dealt with on a timely basis.
Finally, consider market development. How will you grow your business and beat the competition in your area? National advertising programs are not always the answer, and for many businesses, they don’t make sense. The business may be built on local networking and relationship-building. Maybe market development is accomplished through local advertising that’s targeted to specific demographics. Does the franchisor have any metrics in place to show what works? How do the existing franchisees feel about the market development programs?
If the franchise you are evaluating doesn’t have these benefits in place, you may want to check into alternatives.
Geoff Batchelder has been a franchise consultant and franchise development expert for the last 10 years after spending 25 years focusing on business development in the high-tech industry. Contact him at 1-877-222-3722 or geoff@compassfranchisegroup.com, or visit www.compassfranchisegroup.com.