What Is The Right Franchise? By Celyna Vang

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Only you may answer that question, however, some issues to remember are:

What are your interests?
How much capital do you have?
Do you want to develop multiple units?
What days or hours do you want to work?
How easy is it to re-sell your franchise and what are the restrictions or costs from the franchisor?

The financial value a franchise brings to you is a crucial question to ask yourself. For instance, if you’re giving up 10% of your income in the form of 6% royalties and a 4% advertising co-op fee (which, in theory, comes back to your benefit in the form of advertising assets), you should objectively assess what you get back for that 10%. 10% right off the top is a significant amount of money. Will you have a better probability of success? Will you make more money on the bottom line regardless of the 10 per cent expense? It could be just that a franchise makes it potential for you to be in business for yourself due to your comfort level with a current concept, versus making an attempt to create your own. For this reason many individuals go with a franchise, and it’s a very good motive, however, be sure you understand the financial costs and tradeoffs.

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Brand Value

Once you are in the business and have some expertise, the primary value (besides any ongoing assistance and training, which is usually minimal) is the equity of the brand you’ve franchised. A good franchisee is one who understands that the royalty % she or he is giving up every week is an investment in the brand equity of the chain. A brand that is consistent across its various units will have a tendency to build a more constructive fame and, due to this fact, drive more clients — more incomes and more earnings — to its franchisees.

Take into consideration McDonalds®, considered by many to be the model of a successful franchise system. Think about if each McDonalds restaurant had a unique menu with completely different types of merchandise, inconsistent quality, and programs that were changed by each franchisee and subsequently different. It could be impossible for the client to know what to expect before they walked in, i.e., the brand “McDonalds” would have little or no value, sales would slide, shops would fail, and the chain wouldn’t be what it is as we speak (we might have by no means even heard of it!). By insisting that its franchisees conform to the ideas of the brand, i.e., create consistency in accordance with high standards, McDonalds and its franchisees have generally thrived (NOTE: this isn’t an endorsement of McDonalds, nor is it a prediction of success with a McDonalds franchise. It is only the conclusions of an industry observer and, admittedly, long run buyer!).

Franchisees that don’t conform to the system are destroying their own funding by undermining consistency and, subsequently, the brand. The troublesome role of a franchisee is to be independent enough to be capable of owning your own business, however, understanding at the same time that you’re a part of a larger system to which you should contribute value (i.e., conformity and consistency) in an effort to be successful yourself.

Brought to you by Celyna Vang
Book 10 – The Hunchback of Notre Dame by Victor Hugo (Chs 1-7)

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