Franchise Management For Dummies. Mazero Joyce

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СКАЧАТЬ It shortens the time to get the business up and running because you don’t have to find the location or work through constructing and equipping the business – and it already may have a trained staff and management team.

      ❯❯ Bank financing may be easier because the business exists.

      ❯❯ The seller may offer seller financing, and a motivated seller might be willing to cut you a good deal.

      ❯❯ You are buying a business that currently is operating, has existing customers and an established cash flow, and you know the performance of the operating business. Your investment decision is based on current operations and not on projections.

      ❯❯ If the location is being sold by the franchisor, it can share with you the financials for the location, even if it doesn’t include an Item 19 Financial Performance Representation in the FDD (see Chapter 6).

      As with any purchase, you should take your time to evaluate the business. Sometimes you will find franchisors that are churning locations. Churning occurs when a franchisor is selling a company-owned location that it may have taken back from a franchisee because the unit is failing or has failed. If the unit wasn’t viable before, there is a good chance it won’t be viable under new ownership either and likely should have been closed. Churning frequently happens in some systems where the franchisor is trying to avoid disclosing in the FDD a unit failure and instead buys a failing location before it closes.

      

Always get a history of ownership of any business you are looking to purchase. Don’t assume that you are a smarter or better operator than the last guy. A franchisor that has a high percentage of churning may offer little chance for success to any type of franchisee and so may not be a sound franchise investment – even for franchisees not buying one of these recycled locations. Thankfully, not many franchisors churn their locations, but you still have to be alert to the possibility.

CONVERSION AND NONTRADITIONAL FRANCHISES

      A less common alternative to the traditional franchise relationship is a conversion franchise, in which an independent operator, in the same business as the franchise system, converts its operation substantially to the franchise system. For example, an operator of a local pizza restaurant completes remodeling and modification of its menu to operate as a Pie Five Pizza under a franchise agreement. In a conversion franchise, the new franchisee may execute a franchise agreement that has some material differences from the franchisor’s standard agreement, including fees and a transition plan to convert their existing business over to the franchise system’s retail offering.

      Other variations of the standard franchise fall into a broad category usually referred to as nontraditional locations, including mass-gathering locations – airports, train stations, hospitals, college campuses, sports stadiums, ballparks, food courts, portable kiosks in parks and amusement parks, military bases, and so forth – where traffic to your business is generated by someone else’s customers. Also included in this area are locations found in host locations, such as convenience stores, big-box retailers, and so on. These types of locations are generally not available to the average franchisee, and it is common for a franchisor, even when it is giving the franchisee some territorial rights to carve out these locations from the franchisee’s protected territory.

      Chapter 3

      Mirror, Mirror, on the Wall

      IN THIS CHAPTER

      ❯❯ Assessing whether franchising is right for you

      ❯❯ Understanding the advantages and disadvantages of investing in a franchise

      ❯❯ Recognizing the differences among franchisees, entrepreneurs, and employees

      You need to define who you really are and what you want to do. Self-evaluation may be the most difficult thing for anyone to do when they are caught up in the excitement of striking out on their own. However, at this point in your evaluation of franchising, it is essential that you be brutally honest with yourself. Your future happiness depends on being able to make an honest assessment about yourself.

      Most individuals looking to invest in a franchise will have an emotional reaction to the process of selecting one. That should not be surprising because when we train franchise salespeople, part of the training is to make certain they build an emotional bond between the candidate and the opportunity. But remember, you don’t need to become a franchisee and you should stay above the emotional fray and only make your franchise decisions based solely on the merit of the offering.

      Every franchise salesperson or franchise broker is going to tell you that you are perfect for their franchise opportunity. Their job is to sell you the opportunity they are offering because that’s how they make their living – they’re only paid their commission when you sign the franchise agreement.

      This chapter will help you define who you are and whether you’re the type of person who should be investing in a franchise. Your decision needs to focus on you: your lifestyle, family, likes and dislikes, work rhythms, values, ethics, and even dreams. If you’re not absolutely comfortable – for any reason – with one franchise opportunity, remember that there are hundreds more for you to consider. And you should. Franchising will not make you a new person, and it is not a self-help tool.

Starting Your Own or Joining a Team

      Franchising is not the right choice for some people. Although franchisees manage nearly every aspect of their businesses on a day-to-day basis, and how they establish their human resource policies and supervise their employees are 100 percent in their hands, they still need to operate and deliver on the brand promise set by their franchisor. This duality of business ownership and not being in control of the brand standards or what products and services can be offered to consumers can cause difficulty for some individuals.

      

A franchisee is not buying a franchise. They are investing in the right to use the business system of their franchisor. The only thing they are buying is the hard assets necessary to start and support their business.

      New business owners have a choice to make: They can choose to become an independent business owner and steer their own course, or they can invest in a franchise opportunity. If they choose the latter, the products and services they will be selling and how they sell them will be decided by someone else. As discussed in Chapter 1, successful franchisees are not entrepreneurs yet still need to exhibit entrepreneurial qualities. In franchising, that preferential profile is called a formula entrepreneur. Deciding on whether to start your own business or becoming a franchisee depends on a lot of factors – most important is your personality.

      If independent decisions and your needing to make the decisions on every detail of a project are essential to you, you likely should start your own business and not become a franchise. If it’s essential to you to create every element, and deep down you know you will have difficulty following someone else’s direction – especially when you may not agree with them – franchising is not right for you.

      Maybe you might make a better franchisor than franchisee if you have an innovative product or cutting-edge service that is currently not being offered to consumers, or you have a better way than what’s currently available in the market for providing an established product or service, you may be better off striking out on your own. You might even want to start your own franchise system, and if you do, giving either of the co-authors of this book a call would be a logical path for you to take. However, the point we are trying to make is that although franchising can be an outstanding СКАЧАТЬ