Franchising Pros And Cons - Consumer Electronics Blog

Last week?s question from Anthony R. on how you can select the franchise that would finest fulfill his life-long dream of owning his own enterprise sparked quite a few emails from other readers wanting to offer you their two cents on the topic.

Some folks provided valuable insights and recommendations on the best way to pick a franchise and a couple of factors to watch out for, whilst other emails came from existing franchise owners asking me to help them sell their operations to Anthony R.

Hmm, sounds like it really is time to update the old enterprise card as soon as once again. Tim Knox: Franchise Broker At Large? Who knows, perhaps I can franchise the idea.

Final week I promised we?d take a closer look at a few from the factors you should look for when thinking about a franchise opportunity. Bear in mind that you will find thousands of franchise possibilities that range from the low end opportunities obtainable to get a couple of thousand dollars for the high end franchises that price hundreds of thousands of dollars.

The distinction in value is reflected in numerous techniques: the viability from the opportunity, the degree of training and help provided to the franchisee, the track record and monetary stability of the franchisor, the achievement rate with the franchisees, along with a dozen other aspects.

All a lower end franchisor may possibly supply is an instruction manual and the appropriate to work with their company name. Numerous also have really little interest in weeding out prospective franchisees. The truth is many are in company just to collect franchise charges. They?ve tiny interest in regardless of whether or not a franchisee in fact succeeds. If you have a pulse and a checkbook, you?ll be able to turn into their franchisee. As well as your pulse will not must be that powerful.

The greater finish franchisors have very strict franchisee specifications and will not enable just any individual to turn into a portion of their franchise system. They also go to a lot greater lengths to make sure the good results of their franchisees. They offer full hand holding from start off to finish and remain heavily involved inside the enterprise even immediately after the doors open. Yes, you do pay dearly for their assistance, but because the old saying goes, you get what you pay for.

Here are a number of things to appear for in a franchise chance:

Turnkey operation
This is essentially the most appealing function of several franchise systems. Many with the top franchisors will scout the top location for the business, build and equip the facility, hire and train staff, place you through an extensive management coaching program, then toss you the keys. In addition, they?ll function closely with you for the initial few months to help make particular which you know what to perform together with the keys after they?ve been tossed to you.

The majority of franchises do not offer you such total turnkey packages, so be ready to perform much with the upfront perform yourself. Typically it truly is as much as you to find a place, negotiate the lease, develop out the space or erect a developing, set up the gear, hire and train a staff and so forth.

Established track record and management system
As mentioned earlier, numerous with the lesser-known franchise systems offer you you an instruction manual, possibly a training video, along with a couple of hours of telephone support. Not the most effective way to understand the best way to run a business. A superb franchisor will give you thorough management education, either at their facility or onsite at yours. Since one of the causes for buying into a franchise method is always to tap into their expertise and know-how, thorough instruction should be a foremost consideration.

Customers waiting for the door to open
I don?t have the statistics in my pocket to back this up, needless to say, but I?d bet the farm that every time a brand new McDonald?s opens its door, it?s a mere matter of minutes just before the first Pleased Meal is sold. Several franchisors commit hundreds of millions of dollars on national ad campaigns to promote brand awareness. This operates fantastic for the franchisee who can literally have customers waiting for the doors to open on the first day of business.

Usually take into account the downsides
You can find downsides to franchising. Foremost could be the high price of entry. The top franchise possibilities require considerable investment on the front end, usually more of an investment than when the entrepreneur started a related venture on his own. You can open an independent hamburger fast food restaurant to get a fraction from the McDonald?s franchise fee, but you probably won?t sell as several hamburgers. What you?re purchasing from McDonald?s is not just a quickly food restaurant that sells hamburgers. What you?re getting can be a brand, a reputation, and an established business program with ready to consume clients. Be prepared to pay a premium for it.

An additional downside is that if you purchase into a franchise technique you typically must spend a percentage of your revenues back towards the franchisor. You could also be expected to get supplies from the franchisor, including inventory, paperwork, software, personal computer systems, and something else the franchisor decides that they ought to provide to you.

And there in lies the biggest downside of all. If you acquire into a franchise method you do not manage your business, the franchisor does. You?ve got extremely little say-so in running the organization. You must follow their processes and procedures with out variation. And ought to you choose to obtain out with the business you may not even be permitted to sell the franchise to just anybody. The new owner would need to be authorized by the franchisor prior to a deal might be created final.

The bottomline, Anthony, will be to do your homework and make certain the franchise you select fits your personality, your lifestyle, as well as your pocket book.

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Source: http://blog.ilove3c.com/2012/08/31/franchising-pros-and-cons/

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