Crucial Tips on Owning A Franchise
Franchising can be an attractive way to own a company. it offers a proven system with a track record of results already established. Here are some crucial tips to consider when owning a franchise.
Many would-be franchisees see this system as a way to simply insert themselves into a proven business and begin cashing in on the profits. However, like any business, it’s not that simple, even though much of the framework has been completed by the franchisor. Each side has a lot to gain and to lose in this relationship: the franchisor is protecting its brand, and franchisees are protecting their investments.
The Franchisee/Franchisor Relationship
In this unique business relationship, some describe franchising as a parent/child relationship. The franchisor is seen as the parent, offering guidance and direction. The franchisee is the child trying to succeed. This is accurate in many ways, but this simple comparison compartmentalizes the franchisee into a secondary role. The franchisor gives structure for the franchisee to follow, but it’s up to the franchisee to take responsibility for the business’ growth and success.
Each franchisee is an independent business owner, and his or her efforts will determine whether he or she succeeds with the franchise.
Here are some keys to building a healthy, successful, and long-lasting franchisee/franchisor relationship:
1. Due Diligence. Due diligence must be conducted by both parties of the franchising relationship. Franchisors should thoroughly research prospective franchisees and evaluate each candidate’s potential for success in their framework. Franchisees must research by speaking with existing franchise owners to get their perspective, reviewing franchisee materials, and examine the Franchise Disclosure Document (FDD) and the Franchise Agreement. Ask about training and support.
Work with an experienced franchise consultant like Andrew Rogerson to review the type of financial investment that’s required. This will typically include the initial franchisee fee, equipment or location costs, ongoing monthly fees, and advertising fees.
2. Communication. Just like any other relationship—business or personal—clear communication and trust are critical to success. Find out how information, best practices, and news are distributed to franchisees.
3. Resources. A franchisee is buying into a successful business model, so it’s vital that they have the right tools and resources to reproduce that success. This will be things like advertising, training, software systems, equipment, and access to the supplier network.
4. Understand Both Parties’ Responsibilities. This relationship will be successful if each party fulfills his or her responsibilities. The franchisor must provide the franchisee with the necessary systems, materials, and training to succeed; stay up-to-date with changing technology, customer needs, and trends; and make site evaluations to be certain that standards are being met.
The franchisee is required to adhere to outlined systems and operational standards; timely and accurately report sales to the franchisor; hire a staff; and supplement any franchisor advertising with local marketing.
5. Work the Plan. The franchise’s systems and procedures have been battle-tested, so you need to stick to this guide when running your franchise. The franchisor has created a successful business model with standards that define its brand to the public. They’ve got systems in place to make sure those standards are met and complied with to by each franchise owner. If the franchise owner commits to following these parameters, his or her odds of success will go way up.
Andrew Rogerson would like to discuss purchasing a Sacramento franchise with you. He’s happy to help you negotiate the purchase of a franchise in the Sacramento area. To discuss these exciting opportunities and find the one that’s right for you, contact him directly. And to learn more about buying and selling Sacramento business and franchises in general, please visit our website and choose from the drop-down menu the information you’d like.
For immediate help, please send an email to Andrew</a> or call him at (916) 570-2674.