FranMasters Blogging Site
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“You’ve decided to buy a franchise. Now comes the hard part: picking a winner. That can take some serious study. Many franchise disasters could have been avoided had franchisees spent more time learning what a franchise entailed before plunking down what may have been their life savings.
Start by asking…”
CLICK HERE for full article
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Q: What is a recession-proof franchise/industry?
There may not be complete recession “proof” industries but there many that are recession “resistant”. In a down economy, some industries are holding their own and doing quite well. A recession resistant industry has a product in which customers “ might be able to do with less but can’t do without”. Some examples include senior care, restoration, automotive, and commercial janitorial services.
• Why Senior care? Senior Citizens put a very high priority on staying in their homes as long as they can. In turn, their “baby boom” children also want to provide mom and dad the best life they can and keep them in familiar surroundings.
• Why restoration? These services (repair of smoke, water, mold, damage, etc.) are almost covered by insurance (allocated money). If the house is flooded, you’re not waiting to make a decision to spend money).
• Why automotive? People are keeping their cars longer and many dealerships have closed (along with their service departments). Automotive franchises have benefited from these trends.
• Why commercial janitorial services? Business and professional offices, etc. need to keep their facilities looking good and clean regardless of the economic climate
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Also health-related related franchises such as fitness and personal care can be strong as people often pull in to focus on their personal needs. People want to feel and look good, particularly in a down economic time.
Educational concepts also do well, as parents will cut other luxuries before their children’s needs.
These are just a few of the industries that are doing well in this economy. We are always on the lookout for new, exciting concepts to add.
We work with our clients to understand their lifestyle (qualitative) and financial (quantitative) goals.
We then review potential industries and discuss the unique nature of each, the lifestyle requirements, “day in the life” of the owner required to run the business, the investment level and many other specific details. The level of “recession resistance” is a key criteria that we use during the initial selection process.. We then give you tools to help you through the “due diligence” process. This includes introduction to the franchisors and existing owners (franchisees).
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If you are interested in more information about franchising in today’s economy, give us a call. We look forward to talking with you.
~John
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Hands down this is the book everyone should read before buying a franchise.
The best franchise buyer is the educated franchise buyer. This is the fastest way to get there. There are many books on the market to advise prospective franchisees, however this one is the best, straight-shooting book that will truly help you throughout your self-analysis and franchise analysis. I wish each of our clients would read this approachable paperback- an easy, fun and enlightening read.
~Cindy and John
CLICK Here to Purchase from Amazon
From Amazon:
“The truth you need to know before you buy a franchise.
This straight-shooting franchise guide goes beyond the “how-to” to teach you what to expect when starting a franchise. Real-life stories from the trenches illustrate to you how to cope with the difficulties a franchise presents. Smart Franchising reveals the personality types most likely to succeed at franchising and warns you about the character traits that may increase the risk of failure. Plus, it offers an in-depth look at what happens during the research and investigation of a franchise, something glossed over in most franchise books.“
Here is the second part of the Brian Tracy article. Part one was posted on our blog February 12. I hope you enjoy!
~Cindy
“What is Your Mission?
Remember that to be successful, you must become a monomaniac with a mission. This is true today, and it has always been true in our competitive society. To be successful at your job, you must work fast and efficiently and nonstop all the time you are on the payroll. You must become an expert at time management. You must become so efficient and effective that you get twice as much done as anyone else. In this way, you will advance your career at the fastest rate possible, and you will also be on top of your job most of the time, and it will be unnecessary for you to take work home for the evenings and weekends.
Then, when you have finished your work, you can devote your full attention to your family and to the other important people in your life. The Bible says, “A double-minded man is unstable in all his ways.” One of the meanings of this is that if you are thinking about your work while you are with your family, or if you are thinking about your family when you are at work, you end up accomplishing far less in each area.
However, if you are on top of your work, when you come home you can devote yourself single-mindedly–again, like a monomaniac–to your relationships and to enhancing the quality of your interactions with the most important people in your life….”
CLICK here for full article
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Great compact video by Wells Fargo about the basics of getting an SBA loan. This is not specifically geared to franchisees… so keep in mind you will have ample data for income projections and business plans from the wealth of infomation provided by the franchisor and existing franchisees.
(Also about halfway through he mentions a corporate manager may not have the right experience to run a fast food franchise… most franchise industries feel corporate managers have strong backgrounds to f train easily follow the franchise’s individual model. )
Hope you enjoy!
~Cindy
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If you want to start a new business, why should you consider a new franchise vs. creating a business on your own?
Lower Risks. Most business experts agree that a franchise operation has a lower risk of failure than an independent business. The statistics on this vary depending on the definition of failure. Whatever statistics are used, they consistently suggest that a franchise is more likely to succeed than are independent businesses.
Established product or service. A franchisor offers a product or service that has sold successfully. An independent business is based on both an untried idea and operation. Three factors will help you predict the potential success of a franchise. The first is the number of franchises that are in operation. The second predictor is how long the franchisor and its franchisees have been in operation. A third factor is the number of franchises that have failed, including those bought back by the franchisor.
Experience of franchisor. The experience of the franchisor’s management team increases the potential for success. This experience is often conveyed through formal instruction and on-the-job training.
Group purchasing power. It is often possible to obtain lower-cost goods and supplies through the franchisor. Lower costs result from the group purchasing power of all franchises. To protect this benefit, most franchise agreements restrict the franchisee from purchasing goods and supplies through other sources.
Name recognition. Established franchisors can offer national or regional name recognition. This may not be true with a new franchisor. However, a benefit of starting with a new franchisor is the potential to grow as its business and name recognition grow.
Efficiency in operation. Franchisors discover operating and management efficiencies that benefit new franchisees. Operational standards set in place by the franchisor also control quality and uniformity among franchisees.
Management assistance. A franchisor provides management assistance to a franchisee. This includes accounting procedures, personnel management, facility management, etc. An individual with experience in these areas may not be familiar with how to apply them in a new business. The franchisor helps a franchisee overcome this lack of experience.
Business plan. Most franchisors help franchisees develop a business plan. Many elements of the plan are standard operating procedures established by the franchisor. Other parts of the plan are customized to the needs of the franchisee.
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The best franchisors are those that understand their business is not just providing their product or service, but their business IS franchising.
How well they do that will in large part determine how well you do as a franchise owner in their system.
Franchisors products and services range across a broad range: from pet resorts to poop scoop clean up, from automotive repair to senior care, from after school art programs to natural disaster planning for businesses.
Though a strong product or service is important, knowing how to franchise well is just as important for success for everyone in the system.
The best franchisors are those that understand their business is not just distributing their product or service, but their business IS franchising. How well they do that will in large part determine how well you do as a franchise owner in their system.
As part of our service to you, we listen to the industry talk, including that of other consultants, brokers and franchisors, to hear who has a strong reputation and who does not.
One of the key indicators you can look at is the financial model of the prospective franchisor.
Franchises will generally have two or three streams of revenue. They are as follows:
1. Franchise Fees. This is the one-time upfront fee that typically ranges from $20K-$40K. A large part of this generally covers the marketing of the franchise to find the best, qualified franchisees. For example, the fee we receive from the franchisors is paid out of this franchise fee, as marketing and qualifying can be expensive and this is a valuable service to franchisors. (Franchisees pay the same franchise fee whether they use a consultant or go directly to the franchisor.)
It is widely agreed that this franchise fee is at best a break-even proposition for the franchisor and by the time the new franchisee writes the check, the money has been spent on marketing.
2. Royalties. Most franchisors require royalties which generally are a % of the gross revenues of the franchise. This covers ongoing support and is also a profit center for the franchisor. Royalties generally range from 5-10%. If they are higher you should expect a much higher level of service.
3. Products. Some franchisors have proprietary product they require the franchisee to buy for their business. Companies like Ben and Jerry’s have exclusive vendor relationships.
When looking at a franchisor’s revenue source, be wary if the bulk of their revenue come from franchise fees. This indicates they are not focused on long term success, but upfront income. It can cause pressure for them to accept unqualified or marginal franchisees, and failures affect everyone in the system. Any franchise fee over $50 should be suspect.
If the bulk of the franchisor’s revenue is based on their royalties and products (if there are any) then it indicates their business model is relying on the long term high revenue and success of the franchisee.
~Cindy and John
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A Balanced Life Part One-
by Brian Tracy
“According to psychologist Sidney Jourard, fully 85 percent of your happiness in life will come from your personal relationships. Your interactions and the time that you spend with the people you care about will be the major source of the pleasure, enjoyment and satisfaction that you derive daily. The other 15 percent of your happiness will come from your accomplishments.
Unfortunately, many people lose sight of what is truly important, and they allow the tail to wag the dog. They sacrifice their relationships, their major source of happiness, to accomplish more in their careers. But one’s career, at best, can be only a minor source–and a temporary one, at that–of the happiness and satisfaction that everyone wants.
CLICK Here for full Article /a>
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We offer our clients the DiSC® Classic Assessment to enhance the consultation and search process.
The DiSC® Classic assessment helps you understand and define your primary workstyles and personality traits. It is a proven tool used extensively in hiring, training, team management and other areas of business.
The version we use is especially suited to people who are interested in becoming more aware of their work and personality style and how to then manage and work with people of like or different types. There is no ‘right’ or ‘wrong’ type. But we are all very different and this short (15 minute) assessment provides client a full feedback report that is invaluable in all work situations.
We feel this is especially beneficial for our clients as they embark on a new business. The assessment can help you see your comfort with risk as well as the best business model to suit you. In addition, it gives insight on past business situations, good and bad, to help determing what you want your future business workplace to reflect.
It can also help you hone in on questions such as:
Most importantly, it is one more tool to help see yourself, and envision the right franchise that will truly suit your needs. As I mentioned all personality types are valid (from analytical engineers to flamboyant salesmen– or somewhere inbetween) and there is no good or bad report, but we encourage participants to be very honest with themselves in order to get valuable feedback.
This is an invaluable tool especially for business partners and husband-wife teams. John and Cindy had the assessment and the ‘pairing report’ and learned things never discovered in our 26 years of marriage and has made an appreciable difference in our business life as well!
The foundation for personal and professional success lies in self-understanding, understanding others, and realizing the impact of personal behavior on others. DiSC® Classic is a learning tool that helps individuals understand their own behavioral styles and leads to understanding and valuing differences in others.
We are authorized to provide the assessment online- please contact us if you are interested.
Some additional notes on the DiSC® Classic Assessment:
FEATURES:
BENEFITS:
“Becoming a franchisee is often seen as a good first business for an entrepreneur. How does a recession change the equation?
If you’re a middle manager who suddenly gets laid off, what do you do?
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But does a recession change those odds? And are there special challenges and considerations in becoming a franchisee during an economic slump?”…
CLICK HERE for full WSJ article by Richard Gibson
