Checklist to Understand Marketing Benefits of Franchise

In the post about benefits of buying a franchise versus independent business we argued that one of the primary benefits provided by franchise is better marketing at a lower cost. By leveraging their size and expertise a franchise can create better brand and improve sales for all franchisees. Subway positioned itself as the Diet Sandwich Shop in the minds of all Americans by running the “Jared” campaign for number of years.
However, not all franchises do such a good job of marketing. A number of them waste their and franchisees’ money by spending on frivolous, useless marketing activities. That’s why it is important to understand the value provided by franchise in terms of marketing and compare it against the investment you have to make as a franchisee – in other words the return on your marketing spend.
[Read more…]

Benefits of Buying a Franchise versus Independent Business

As we mentioned in the previous post on myths and realities of franchising franchising model helps those who want to get into small business; but do not have prior experience or do not want to start from scratch. These people like the fact that buying a franchise versus independent business will reduce the risk of failure. At the same time, they also question the value provided by franchisor for the amount of money they have to pay to them in terms of initial franchise fee as well as ongoing royalty.
As with any business transaction, it is important that you understand what you are getting in return for the money paid to the franchisor. While franchisor does provide benefits in exchange for the fees they receive; not all of them are equal. In addition, different franchises provide value in different areas depending on their strengths and strategy. You should know why you are buying one franchise over others and set proper expectations before making decision.
In our experience, franchises provide value in 4 categories listed below:
[Read more…]

Understand Operating Requirements of Franchise before Joining


How franchisees operate their stores is probably the most contentious issue that raises friction between the franchisor and the franchisees. We have come across number of franchises where the franchisee and the franchisor are at odds with regard to how the store should be operated – the franchisor wants franchisees to keep the stores open late to improve sales; while the franchisees only look at it as increasing their labor expense without adding much to the sales.
In our opinion, there needs to be a balance between the needs of the franchisor and the franchisees. However, in real life, the balance is usually tilted in franchisor’s favor. The district supervisors and inspectors hold a lot of sway in dictating how franchisees run their businesses and can even impose penalties and other restrictions in many cases. In one example, the inspector asked the franchisee of a fast-food restaurant to replace the oven because it was not showing proper temperature. It could have been repaired for $1,000; but the franchisee ended up spending $20,000 for new oven simply because the inspector insisted on it.
How can you ensure that you understand whether franchisor runs the operations in a pragmatic or dictatorial fashion and avoid getting into a franchise where you have constant fights?
[Read more…]

10 Questions You Must Ask Franchise before Joining

As we mentioned in the previous post the franchising model provides a springboard to many would-be entrepreneurs who dream of owning their business; but do not have experience or time needed to take care of myriad aspects of running a small business.
While franchising does provide the needed support and tools for running the business; many people wrongly believe that because they are going in the franchising business they can operate the business without much effort on their part. Nothing could be further from truth. It is imperative that you do your homework before signing the franchise agreement and hand over the check for franchise transfer fee.
[Read more…]

5 Common Myths and Realities of Franchising


The franchising model provides a springboard to many would-be entrepreneurs who dream of owning their business; but do not have experience or time needed to take care of myriad aspects of running a small business.
While franchising does provide the needed support and tools for running the business; many people wrongly believe that because they are going in the franchising business they can operate the business without much effort on their part. After all, the franchise is supposed to take care of everything in exchange for getting the monthly royalty payments, right? Nothing could be further from truth.
In this post, we aim to dispel this and other myths held by entrepreneurs. You should also look at previous blog posts that discuss qualities to look for in a good franchise as well as signs that show the franchise will be successful.
[Read more…]