Have you ever noticed how new parents just can't resist passing on their learned-on-the-job tips for managing a baby when friends or even acquaintances join the band of the sleep-deprived? Some of us are just bursting to tell the rest of the world what we know. Let's face it, imparting our knowledge to another person is human nature, and in cases it can add value to someone's life.
In this spirit, Franchising Magazine has cherry picked the best snippets of knowledge about franchising from those in the industry – to help your understanding of what matters before the business is yours.
So, what do you need to know before you buy a franchise? Michael Janos,
Computer Troubleshooters computer and internet franchise, says "I'm probably a person to ask this question as I spent all of my working life working for large corporations so that I knew basically nothing about running a business.
1. How will I build a business? "There are many things that if you don't ask can cause you to fail in your venture," says Janos. "I suppose after getting a good solicitor and accountant to ensure that the paperwork is up to scratch, the questions would be around why buy a franchise in the first place. Especially in my industry where anybody with a thumb drive and a screwdriver, can call themselves a computer technician. I did ask the following question, which is actually the same thing: "How can the franchisor help me build a sustainable business in an area with established competitors?"
2. Focus on marketing
"Franchisors provide two main services to their franchisees: the first is operations, that is, how to run your business. The second, which I now know is extremely important, is marketing. I used to think you just needed to be good at your work and the jobs would flow. I know now that somebody who is competent and markets well can nine times out of ten do much better than an expert who does not market themselves. "Computer Troubleshooters nationally does not do a lot of advertising, but provides a strong brand and a lot of training and advice on marketing. This is distilled from the knowledge of more than 450 other troubleshooters. In fact, at the start I got a day-to-day diary on the activities that we should do in the first three months on setting up the business. In addition, I had the services of a business coach to tailor my marketing plan to my own special needs. "I can certainly see the advantage in this as most small businesses market little and the little they do, they do badly."
3. Don't leave it to the professionals
A fundamental error in deciding on a franchise may be a tendency to "leave it to the professionals”, says Michael Marcus of The Franchisees Advocate Group. "Many franchisees believe that the opinion of their legal or financial advisor addresses all of the important elements relating to purchasing a franchise. Provided the franchisee can tick the boxes in relation to the information provided by each of these, he may feel [an unwarranted] satisfaction that the franchise is good for him.
"The fact is that these specialists may be ill-equipped to provide the overall insight that a franchisee may require in order to make an informed decision on whether to acquire the target franchise, and to minimise his risk. Such a decision requires an overall understanding of all of the important elements of the proposed franchise business, as well as the industry and market in which it operates.
"It remains the franchisee's ultimate responsibility to ensure that he considers all the information necessary to make his franchise-acquisition decision, (and consequently to reduce the prospect of legal conflict). "Anything less may result in substantial financial loss and emotional stress."
4. Listen and learn Gareth Grant brings considerable franchisee experience to his role heading up advisory consultancy
Franchise Mart and knows what it is like to start up in a new industry.
"Looking back on my time as a
Signarama franchisee brings back memories of uncertainty. Before I attended the Signarama training school I was nervous and unsure about my decision having little knowledge about franchising, no knowledge of signs and no customers; how were we going to be successful? What is interesting is that at the training school, all of the students felt the same way.
"If I could share a thought with people looking to become a franchisee, it would be listen, take advice, be humble and ask for help. You have bought a franchise business with a successful business model, so replicate the business and it will increase the chance of success.
"Change brings uncertainty, whether it is the purchase of a new house, career change or investing into a franchise business. However what matters is how to deal with those changes. People deal with change in different ways but in franchising it is essential that the new franchisee does not start their journey on franchising being arrogant, opinionated or unwilling to listen to the franchisor. The most successful franchisees are the people who can take on board recommendations and suggestions from the people who have been running the franchise operation.
"Asking the franchisor questions, seeking advice, or asking for help is not a sign of weakness, it shows that the franchisee is willing to listen, learn and grow a successful franchise business."
5. Research, research, research But beware; owning your own business is hard work. As Kerry Noyes, regional franchisee for
Fastway Couriers (Gold Coast) says "...the rewards are definitely out there, but they won't just fall in your lap. If you want the easy route, become an employee, not a franchisee".
"As for the secret, it's simple; research, research, research! It's the key to your business success. Do your homework, check out all of your options, and don't rush into the first business opportunity you see. If you put the effort in, your persistence and diligence will pay off a thousand times over."
6. Do comparative advertising costs Shane Hodskiss,
Aussie Farmers Direct, says looking at a full range of advertising costs/methods/results to compare from the start rather than learning through trial and error would have been very handy.
"Every advertising method or outlet will only tell you the benefits of their service; the full story is only available through speaking to everyone as their strengths are usually the opposition's weakness, giving you the knowledge to make a decision. Shop around and think outside the square as costs and results vary greatly."
7. Check out the official guides Monica Longmire,
Just Cuts franchisee, Belconnen & Woden says that the government can really help you get started. "We researched for two years before buying our first Just Cuts franchise in 1994, so we knew what to expect. However the government didn't provide as much franchisee support then as it does now. I'd recommend that any potential franchisee obtain all information possible on franchising from various government bodies. Publications such as the ACCC's Franchisee Start-up Checklist, the Franchisee Guide to the Franchising Code of Conduct and the Franchise Bulletin are all especially useful. They provide a simple, clear and concise guide to help the franchisee cover aspects of entering into a franchise."
8. Finance, finance, finance Tony LeGall,
Pack & Send franchisee, East Perth says at the end of the day, the money is all that matters. "Finance, finance, finance! To me, the most important thing is to get a solid idea of the financial well-being of the company as a whole. It's also beneficial to be able to analyse the individual franchisees, speak to as many people as you can about their business model and the benefits of being part of an integrated system. I did this before purchasing my first Pack & Send franchise and it was critical in building my picture of the system and its networks."
9. Keep a balance Jonathan Atherton,
My Home home services franchise, believes it's all about keeping a balance. "Be prepared for a roller coaster ride. There is good and bad in starting up your own business, and the bad can seem terrible. It's easy to get it out of proportion. When you're trying to nurture a fragile beast, any downer hits you hard. To go all literary, Rudyard Kipling famously wrote in his poem If, '... meet with triumph and disaster and treat those two impostors just the same'."
10. You get out what you put in Daniel Isaac,
Gloria Jeans restaurant and cafe franchise, says there's no substitute for hard work. "Although you are buying into an established franchise model, basically what you put into it is what you get out of it. It's hard work, there is no silver bullet, and you need to continuously invest in your business on an ongoing basis through training, development and marketing - never taking your eye off the ball. Also one needs to work in the business and on the business, nothing replaces real product knowledge when delivering service. In our business this is all about quality, consistency and providing a great guest experience."
This article appears courtesy of Franchising Magazine.
The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.24-Jun-2008