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Any one who has attended a franchise trade convention will tell you that franchising is growing more every day and is accounting for almost a majority of all retail sales.  According to the International Franchise Association (IFA) franchising makes up almost 40% of retail sales and generates billions and billions of dollars each years.  Also, a large percentage of the US work force is now employed by a franchise company.

Of course with so many franchise companies doing business there are accounts of the profitability of franchisors and franchisees, which leads one to believe that franchising must be a shoe in for business ownership success.

However, before buying a franchise take a look at yourself and the franchise company closely.  Franchisors typcially want franchisees to help them grow their system.  If the company was mature and established most likely it wouldn’t need to offer franchises, as a well run company owned store would net more profit to the company than a franchisee paying a royalty.  Also, franchisors sell franchises as a way to raise capital and speed of their rate of expansion.   So, if you don’t want to be a part of a system that is growing and adding new locations, then franchising may not be for you.

You should ask the franchisor what characterisitcs in a franchisee are they looking for and what qualities and experience is needed to be successful.   What does it take to get into franchising?  It is a delicate balance between being able to work independently at running your business, but at the same time willing to follow orders.   In some ways, being a franchisee is like being a solider on a battle field.

Also, when you are franchisee you may be in business for yourself, but you are controled by the franchisor in how you operate and the services that you offer.   Compliance to the system is critcial.  Failure to comply could result in the revocation of franchise.  Thus, like it or not you will need to follow the franchisor’s guidelines.  I read recently about Burger King franchisees who were furious that the franchisor corporate office had lowered the price on thier double cheese burger to one dollar, as a way to compete with McDonald’s dollar menu.  Thus, with decisions like that you have to trust in the franchisor’s business and marketing decisions that they are implementing policies to best advance your interests.

Before you get into franchising you should talke with actual franchisees about their experience.  Read franchise articles and franchise blogs on sites like http://www.getintofranchising.com.   Also, consider contacting a franchise consultant or broker for feedback and advice on different franchise concepts.

As you can see, although franchising provides training, support, a developed system, marketing resources, and an established brand, there is a level of personal sacrifice and loss of freedom that goes with accepting these rewards.

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About the Author:
Michael Johnson, franchise consultant for getintofranchising.com

http://www.getintofranchising.com

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Posted April 27th, 2010 under Franchise. RSS 2.0 feed. Both comments and pings are currently closed.