Franchise not always Easy
Franchising is a popular entry to owning and operating a small business. The sector has experienced growth of 16% in the last 3 years with over 1000 chains and 70,000 outlets creating $170 billion sector. During and post Financial Crisis workers sensing or experiencing retrenchment were driving franchise take-ups. Keen to enter the business fray new players committed redundancy money, family homes and life savings to buy in. Buyers decision making processes are not always tempered in good business sense or business knowledge. Key decision factors to purchase franchises are based on lifestyle, brand security, self direction, income and skill development. What becomes apparent for new franchisees is their investment is a costly buying of a job and not the freedom and financial empowerment anticipated.
Franchising is not always a business model of roses and the question to ask yourself is it for me. However a business model that has developed the business systems, manuals, processes for quality replication of product and services is what any SME should aspire . Mac Donald’s is the ultimate development of business franchise model delivering customer experience , product ,cost and quality consistently.
Business operators with successful businesses are drawn to become franchisors for their own business expansion needs. Clients and associates often spark the process by suggesting ,this business is so good one would work well on the coast or up north why don’t you franchise. Rather than replicate and run more of the same businesses , owners greed rushes an ill-conceived unprepared franchise model onto the market for the unknowing to buy.
For new franchisee business entrepreneurs, Caveat Emptor. Be very aware. Do more than enough due diligence. The Franchise Advisory Centre suggest 1 hr due diligence per every $1000 of investment. Pay money first to get sound business advice . Be absolutely sure you understand all documentation. Before purchase go and work in that particular business . Go to the shopping centre and check out the daily operations, count the customers for yourself. Be sure that all promises and statements made by the franchisor can be verified. Understand the license agreement. Be clear on responsibilities like training, launch promotions , staffing and rostering requirements, inventories. Understand the prescribed method of product preparation and sell, advertising and marketing. Ask the tough questions. What if this doesn’t work out , if it’s not profitable , when it’s time to sell . If you are an individual by nature a franchise may not be you.
Operating business or considering starting business for Free business assistance contact ; Redland City Business Grow .(JavaScript must be enabled to view this email address)
Posted by Rod Richards on 20 Jun 2010