Do You Have What It Takes to Be a Franchisee?

Franchising 101

By BOB SEAY

The right franchise opportunity provides a fast track to owning a successful business of your own. As a franchisee, you have the support and resources of a large corporation. This includes help from experts in training, marketing, and all other phases of the business. You have the benefit of established brand recognition and more advertising than you could ever afford on your own. More importantly, franchise owners are presented with a proven, step-by-step plan of a successful business model. In exchange for these benefits, you agree to follow that plan.

But franchising isn't for everyone. As you consider which franchise opportunities might be right for you, you also need to consider whether you have what it takes to be a successful franchisee.

Franchise owners are not necessarily entrepreneurs

One common myth about franchising is that franchisees have a strong entrepreneurial spirit. While franchisees do have much in common with more traditional entrepreneurs who start their businesses from scratch, you do not have to be an entrepreneur to operate a franchise. In fact, the typical entrepreneur would likely become quite frustrated as a franchisee. True entrepreneurs are extremely independent thinkers and tend to "fight the system." Franchise owners are more comfortable working within a system and are better able to take direction from others.

The franchisee exchanges entrepreneurial independence for a greater degree of business security. How much greater? Industry experts point out that the failure rate for new franchisees is only about 5%. (Potential franchisees will need to ask the franchisor about the rate of success for the specific franchise opportunity.) Business started by entrepreneurs have a much higher rate of failure. In fact, over half of all new businesses fail within the first five years. The reason behind the overall success of franchising is simple: the franchisor knows that the success of the company depends on the success of the individual franchisees. Failing in a new market makes the company look bad and costs the franchisor money. The company will do everything in its power to see that each new franchise becomes a success. In exchange for this security, franchisees must be willing to follow the franchise plan.

If you are the type of person who does not enjoy taking instruction from others, then you may not be happy as a franchisee. If you appreciate having established guidelines and don't mind working within a system, then investing in a franchise opportunity might be the best choice for you.

The Unmotivated Need Not Apply

As a franchise owner, you are the boss. No one is going to tell you to get to work or when you need to stay late. Successful franchisees are self-motivated, self-disciplined individuals who work well without supervision. They draw from an inner-motivation that comes from their own personal pride and the desire to succeed.

Motivation isn't just about what you want; it is also the measure of how much you want something and what are you willing to do to get it. Highly motivated people do not spend a lot of time basking in their accomplishments. As soon as they reach one goal, they move on to another. Their goals also tend to grow over time. A potential franchisee might set an initial goal of buying a franchise and getting it off the ground. Once that is accomplished, he or she would set specific performance goals for each quarter, along with annual goals for improvement. Each goal is higher than what has already been achieved. Motivated individuals always want to have more and to be better.

It Takes Money to Make Money

Franchise opportunities require some initial investment. Depending on the franchise, the purchase cost may range from a few thousand to several hundred thousand dollars. To this is added the expense of purchasing equipment, supplies, and other overhead costs. The goal of the franchisor is to maintain a consistent product. Cutting corners is not allowed. In many cases, the franchisee is required to purchase supplies through the franchisor. If you are going to open a franchise seafood restaurant, the franchisor will provide the exact type and size requirements for all your cooking and refrigeration equipment needs. Similar requirements exist for most franchise opportunities.

Potential franchisees should consider their personal financial situation before they purchase a franchise. Can you afford this investment? Can you afford to live without an income while your business gets started?

Knowledge and Experience

Your knowledge and ability to perform inspires confidence in your employees and customers. Franchise owners must be able to roll up their sleeves and do any job in the business, whether that means working behind the counter or in the back office. Understanding the job allows you to accurately estimate how long a specific task should take and to better evaluate the performance of your employees. It also allows you to pitch in when a job needs to get done. This doesn't mean that you have to limit yourself to franchise opportunities directly related to your previous work experience. Franchisor training can provide many of the specific skills that you will need to know. You must, however, be willing to learn.

Franchisees need a thorough understanding of how to run a business, including an understanding of finance, marketing, accounting, and other business skills. You must also have the necessary people skills to work with the public and with your employees. This type of training is not typically provided by the franchisor. If you lack these skills, then you may want to take the appropriate training or reconsider whether a franchise opportunity is right for you.

Being Stubborn can be a Good Thing

Call it stubbornness, tenacity, or stick-to-it-ness, the successful franchisee has what it takes to withstand the normal peaks and valleys of business. All business owners face setbacks. The difference between the success and failure of a business depends largely on how the business owner or franchisee handles these situations.

Like the successful entrepreneur, the successful franchisee has a vision of the potential of the business and the unfailing belief that the franchise can get there. This tenacity also applies to getting the job done. Whether it is meeting the weekly payroll or working towards annual goals, successful business owners refuse to give up until the job is complete.

Working for yourself without working by yourself

In many ways, the franchisee is an odd mixture of business owner and employee. You have the responsibilities and benefits of owning your own business. At the same time, you have the advantages of an established corporate structure. Along with those advantages come the responsibility to follow orders and to live by the rules of the franchisor.

The franchise system offers some incredible opportunities for those who have what it takes to be a successful franchisee.

Do you have what it takes?

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