Category Archives: Running a Business Franchise

Successfully Breaking the 3 Franchising Myths

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There is no doubt that franchising can be considered as one of the best ways to start a business. Indeed, several small business entrepreneurs are looking for a franchise opportunity. When you buy franchise, you will have the opportunity to get benefits from this high-impact with low-risk opportunity. However, while having a franchise seems promising, there are several myths that held back some entrepreneurs to start their own franchise. Thus, it is wise that you learn how to break these myths and start your journey to success.

Myth no. 1 – The more money you spend, the more you’re going to get.

Some people would think that in order to get bigger profit, you need to invest the bigger amount of money. However, this is not true for franchising. When you buy franchise, you are not required to spend large investment but instead, you are required to spend your money wisely. Thus, calculate your financial resources properly and speed them wisely. Spend your money smartly and make sure that you can get higher returns from your minimal investment. Thus, money and profit gained don’t have any direct correlation in the world of franchising.

Myth no. 2 – Food chains are the only successful franchises in the franchising industry.

If you are looking for a franchise opportunity, the first thing to cross your mind is a food chain. Many entrepreneurs thought that food chains are the only successful franchises. If you have this mindset then, something is stopping you to buy franchise other than food chains. This myth is not true in franchising. In fact, consulting services is one of the successful franchises. This franchise option even gives higher returns compared to the restaurant chain.

Myth no. 3 – There are limited finance options.

If you buy franchise, limited finance options were available such as SBA – this is nothing but a myth. In the world of franchising, there are several financial options such as home equity loans, IRA rollover and ERSOP.

If these myths are stopping you to grab any franchise opportunity then, think again. You must not be driven by these myths and you must learn how to separate facts from the myths. If you really wanted to become successful in your franchising venture, you must learn how to break these myths successfully. Instead of focusing to these, try to establish a clearer way on how you must deal misconceptions. Better strategies, better management and wise spending would be great in achieving your goals in the franchising world.

How Success is Achieved through Franchising

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Before you decide to venture into franchise opportunities it’s very important to do your research on the franchisor.  And it will also be to your benefit to make a thorough assessment of yourself.   Your business and you should mesh well together because you and your business will become synonymous once you start operation of your business.  People will start attaching your name to your service or store.  Whether you’re running a franchise or an independent business, the way you run things in your business will be a great reflection on yourself.

In franchise opportunities you make money by following a system.  But there are innovations you can do while still following procedures without sacrificing quality of the products.  Deviating from procedures can cause differentiation of products which will not be accepted by the franchisor.  But franchisees are allowed experiment and find ways to deliver the same quality of service or products more efficiently.

The Wall Street Journal clearly spells out where the success of franchisees comes from, it will highly depend on how well they’ll follow and execute the system set by the franchisor.  Some people may get the wrong idea about franchising they may think that it’s an easy “make money” or a “get rich” scheme.  But owning a franchise business requires a lot of hard work before you can reach financial success.

Try to talk to other franchisees about their business and find out as much as you can about the company.  You may be surprised to discover some details not readily mentioned by the franchisor during your inquiry with them but franchisees will be more than willing to give you more information about the business.  This will help you prepare yourself for your own franchise business.  It’s always a good idea to know what’s in store for you in the business world.

Franchise support is a big piece of your franchising success.  It’s important to know what kind of support will be offered to you.  In general, franchisors will offer consultation on location, support in marketing, help in hiring employees, training of employees, and overall all business operation like applying for licenses, permits and other paper works for your store.

Ultimately, it’s how you run things and how you manage it will be the big basis for success.  If you constantly meet the standards that are expected by your consumers then there’s no way for you to fail in your franchise venture.

China’s Luxury Market Evolving at Alarming Rate

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Anyone who wants to learn how to start a business can start by thinking of what products are currently in demand at the moment, how long that demand will last, and how to supply that particular consumer need or want in an efficient and cost-effective manner.

Those aiming to acquire certain franchises for sale will be interested to know that there’s an ongoing purchasing trend happening with the Chinese consumer market right now. Based on statistics released by personal luxury brands – including Prada, Gucci, Dior and Burberry – a large portion of their revenues generated is currently being driven by Chinese consumers.

Prada recently announced a 30 percent year-on-year increase in net income during 2012’s third quarter, with sales in China increasing by a whopping 33 percent during the same period. Moreover, roughly 50 percent of the company’s sales to the Chinese are raked in from stores residing from outside the country.

Observers believe say that the fashion house’s impressive figures clearly denote the Chinese’s ever-growing refined tastes, and their need to satisfy this insatiable desire through the purchase of luxury goods.

Boston Consulting Group estimates that the Chinese will have spent $41.5 trillion dollars on such merchandise by the end of the decade. This organization also predicts that the country’s annual $2 trillion expenditures witnessed in 2010 will jump to $6 trillion by 2020.

“The Chinese consumer has a profound belief that they deserve luxury products now. They had fifty years with so little, and now, many can afford to buy luxury goods,” says Francois Pinault, CEO of the French luxury producer and retailer PPR (originally known as Pinault-Printemps-Redoute.)

“Their growth in demand is rooted in an expression of individualism in the way you dress. It is a way to differentiate yourself from friends and neighbors. Chinese consumers buy to treat themselves. This China market has evolved faster than any other market in the world.”

In China – as well as other locations across the world – luxury franchises for sale offer their owners an excellent opportunity to capitalize on this trend of significantly increasing demand for premier commodities.

Those within the early stages of learning how to start a business may be interested in knowing that experts are predicting this trend to continue for a diverse range of lux items and services, including, clothing, accessories, watches, home goods, wine, health care and education.

The Story Behind the Success of Two Men and a Truck

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Brig and Jon Sorber dabbled in the moving van business during their high school years back in the 80s to make money.  They’d borrow their mum’s 12 foot van and do moves for apartments and small houses in the Michigan and Lansing areas.   They stopped their small moving business when they went off to college.  At least that’s what they thought they did.

But Mary Ellen Sheets, the boys mum, had a better idea when the boys left.  Even when her boys were already off to college she still received calls for jobs.  So she asked them if she could hire a few guys to keep the business moving along and make money out of it.  So it became a routine for Brig and Jon to go back on their truck during summer and Christmas breaks and continue with the moving business.  They were surprised to come home one summer with a brand new truck parked in the driveway.

The big break in the business happened when they set their foot in to franchise opportunities.  Big Sorber, currently CEO of the franchise, says that at the beginning they didn’t have a clue about what franchising really is and so they made a lot of mistakes.   But they learned fast from their mistakes.

Now after two decades in the moving business, Two Men and Truck has turned into 228-unit franchise.  They now have more than 1,400 trucks.  Franchise opportunities helped this business get to where it is now.   Their transition wasn’t easy, but they were able to pull it through.  One important ingredient is to have a clear mission statement that will be carry core values that will create strong partnerships between the franchisor and the franchisee, it shouldn’t be all about just making money.

 

Franchise Opportunities With Highest Chances Of Failure

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Deciding to buy a business should be done carefully – although many franchise opportunities bear great potential, there’s always a chance for failure when mismanagement, plus other factors, becomes an issue.

On the other hand, there are businesses that are flat-out risky, and are statistically marked to fail. There are various franchises which fall under this category, but the two types which can be considered the riskiest of all are fast food restaurants and ice cream shops.

With data acquired from the US Small Business Administration (SBA), researchers were able to determine the two commercial establishments listed above have the highest rates of failure of their federally guaranteed loans utilized to acquire franchises.

Analysts were able to come up with this conclusion by using this simple formula to determine a business’s failure rate:  number of loans charged-off plus number of liquidations divided by number of loans disbursed throughout the franchise system.

Based on this formula, the top five franchise systems with more than half of their SBA loans failed are: Golf Etc. at 71. %; Mr. Goodcents Sub and Pasta at 65%; Dream Dinners at 60%; Planet Beach at 58%; and Carvel Ice Cream 56%.

Keeping this list in mind, anyone looking to buy a business from similar franchise opportunities should definitely consider the risks involved first. Although there still a good chance to succeed with the purchase of any of the establishments above, financial failure remains the more probable outcome for investors.

Also, keep in mind that the formula includes loans guaranteed under SBA financing programs only. Regardless, strong conclusions can still be derived with the use of SBA-approved loans, mainly because the government tends to be unbiased when gathering data pertaining to its borrowers, and when presenting it to the public.

In addition, a large percentage of franchisees acquired their finances from SBA financing programs, thereby fortifying the reliability of all assumptions made based on the gathered data.

This presentation of franchises which are most likely to fail may not gain favorable responses from other franchisors, especially the ones belonging to the list. Moreover, they likely have their own slightly modified formulas for determining the worst franchise opportunities.

Nevertheless, ample research and planning should be done before ultimately choosing to buy a business. Statistics should always be included in the basis for selection to ensure a successful commercial operation is acquired.

Tips for Staffing Retailing Businesses

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Retailing businesses and franchises for sale don’t come with employees upon purchase or setup, unless the venture was bought second hand. In the majority of cases, the entrepreneur will have to hire people to get the business up and running.

When hiring employees, it’s important that they’re qualified for the job, and possess the desire to work towards the satisfaction of customers and the company’s growth. In some instances, this can in some way be a difficult task. Some franchises may have positions that require unique skillsets that aren’t easily found.

In this case, looking beyond the usual sources for hiring may be necessary. One good source in particular is former employees of similar businesses, particularly those who’ve worked at another outlet owned by franchisee of the same franchise company.

These individuals will certainly possess the skillset required to fill out certain positions. Regardless, thorough screening may be required, since the reason why they left their former employer might be something “bad.” And since he’ll be working within the same company with identical policies, it’s possible he’ll be quitting for similar reasons.

With some franchises for sale, staff training is often rendered by the franchisor, especially in the case of retailing businesses. With that being said, it is probable to hire someone with little to no knowledge regarding a specific role in the business, and instill the necessary skillset through training programs setup by the franchisor.

The franchisors usually create these programs so that employees will be able to work effectively and in compliance with the franchise’s standards. If every franchisee’s commercial establishment performs well, then the franchisor benefits more, so it’d naturally be in their best interests to see that everything is done to ensure the success of the business is taken.

When creating a staff comprised of skilled and driven employees, it’s vital that the operations of the business aren’t heavily dependent on anyone of them, especially on the ones with low-income positions in fast food and retailing businesses (and even in most franchises for sale).

When the employee turnover becomes high, immediate replacements that are not trained may have to be hired, which will negatively impact the consumers’ perception of the business.

With that being said, having more employees work shorter shifts (instead of the other way around) is a recommended course of action. If one of them quits, it’ll be easier to cover the number of hours he worked by having another employee temporarily work overtime.

The Advantage of Outsourcing a Business

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Success in business is measured by its profitability. Success also depends on the ability to get employees to work together as a team. One of the hardest challenges faced by retailing business owners is searching for good employees. Even in a franchise for sale business, good employees and sales workers are hard to find. It takes time to recruit, interview and maintain a staff, which is reliable, trustworthy, and hardworking.

The good news is that there are human resources outsourcing businesses out there. According to the market research firm Dataquest’, this type of service is estimated at approximately $37.7 billion in 2003. Outsourcing HR is great advantage, as tasks like payroll, recruiting, training, employee manuals and handbooks, and compliance are eliminated from a small business owner’s shoulders, so he is free to focus his attention on the growth and development of his business.

Outsourcing is right for a business if it has fewer than 100 employees. Its advantage also lies on the price and the time given for retailing business owners to focus their energy on the business at hand. By streamlining HR efforts, both the employees and business owner will be assured that the business is on track and headed for great success. A person who has just bought a franchise for sale also benefits from outsourcing since they will be able to keep their expenses low.

Four basic avenues of business could be outsourced: payroll administration, employee benefits, employee management, and risk management.

Payroll administration covers payroll processing, tax planning and preparation including 1099, W-2 filings and payments.

Employee benefits include management of the workforce’s health care benefits. An outside source can recommend the best option in employer/employee contributions, establishing new hires, and performing cost analysis and provision for a solid solution to those health care issues.

Employee management can be outsourced, so the business owner does not need to do the recruitment, interview and onboarding of new employees. Some HR agencies provide the complete package for recruitment, while others only handle the head hunting of candidates.

Risk management looks after workers’ compensation, dispute resolution, safety inspections, employee policies, and handbooks.

Every retailing business owner must decide if outsourcing is a viable option for his small business. People who have just bought a franchise for sale should definitely outsource as much as possible in order to save money. Try the following cost analysis. Take the estimated costs of an outsourced program, compare it against the average salary and maintenance of an in-house HR director or staff then see if the total difference in savings is worth it. Find out if there is a considerable time loss, or an increase in production. If the answer is positive, then try outsourcing for a small period of time.

 

How To Identify And Eliminate Distractions During Work

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Learning how to start a business that makes good money is a very attractive idea. There are many types of commercial establishments raking in consistent amounts of cash every day, such as retailing businesses. The level of financial freedom rendered by these income generating entities is high, which is all the more reason for employees to step out of their comfort zones and try starting businesses for themselves.

These commercial establishments will naturally require staff, wherein each member of the team performs specific tasks to ensure optimal operation and growth of the entire company. While the each worker works by the hour, the amount of time the owner puts in counts the most, as he usually addresses all areas of concern inside and outside the establishment.

Learning how to start a business successfully will require the owner to make the most of his time in order to guarantee proficiency in operations and general growth. Owners of multiple retailing businesses will find that the time they have at hand is very limited, and is further diminished by a number of distractions that reoccur throughout the day.

While being distracted from typical routines is perfectly normal, it’s crucial to determine which interruptions are completely necessary, and which ones aren’t worth the amount of allotted time. Now, mentally recalling these disruptions and assigning an “importance rating” to each one may not work, as there can be plenty of diversions which take place throughout the duration of a week.

That being said, getting a piece of paper to record such disturbances, plus a list of supporting details for each one, is the best way to identify and eliminate insignificant interferences.

Here’s how to create a “sheet of distractions”: take a piece of pad paper, divide it into six columns, and write the following headings: date, time, person, concern, duration and importance. Basically, one entry would consist of the person’s name, the date he acted as a distraction, the time he did it, what his concern was, how long the disturbance was, and how important his concern was.

Entries should be inputted for a total of two weeks, wherein each distraction plus supporting details must be recorded immediately. The data will reflect how much time is spent on meaningless interruptions. From that point on, measures can be taken to eliminate these disturbances, and the owner will be able to run his business (even multiple retailing businesses) more proficiently.

Again, learning how to start a business is just a small portion of the battle. It’s important that the owner continuously and efficiently maximizes his time to ensure his company’s success plus continual growth.

Benefits and Responsibilities of Franchise Ownership

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Knowing how to start a business is important before getting into anything. One way to make money is by getting into a franchise. By investing in a franchise through paying a franchise fee, the franchisee has the right to operate that certain business. Essentially the investor will be given a proven system and the right to utilize the franchisor’s brand name for a certain length of time, along with assistance. Investing in a franchise could possibly lessen any risks when investing in a business, since the investor is putting money into a company that is already established. Keep in mind though that there are other costs on top of the franchise fee.

Below are the different Components in a Franchise System:

Learning how to start a business includes knowing about the costs involved. Usually, the franchisor will give the franchisee the right to use their name and will also provide assistance for a certain fee. These costs include an initial franchise fee, which is non-refundable, along with other expenses needed to establish the business. These expenses can consists of rent, construction, equipment, and initial inventory. In many cases, payment for insurance, operating licenses and a fee for grand opening has to be paid for. Other fees that need to be budgeted for are advertising fees and continuing royalty payment.

So that all franchise outlets are uniform, in most cases franchisors will control the way franchisees operate their business. For instance, they may want to pre-approve locations for the store, they will dictate the appearance or design of the outlet, they may impose restrictions on the services and goods offered by the outlet, as well as restrictions on the method of operation, and restrictions on areas of sale. In short they know how to best make money with their business so they want franchisees to follow suit.

Other rules apply as well in a franchise. For instance, the franchisee may lose their right to the business if the contract is breached in any way. In addition, these franchise contracts are only for a limited time period so there is no guarantee that the contract will be renewed after it ends. There are a number of reasons a franchisor can terminate the contract. For example, when royalties are not paid or if performance standards are not followed, then the franchise may be terminated and the franchisee will not be able to make money any longer.

There are some franchise contracts that can go on for a long period, like twenty years. However, when the contract ends, the franchisor might not renew it, as renewals aren’t an automatic thing. This is why it is always best to know how to start a business before getting into one.

Being a Franchisee: The Good, the Bad and the Surprising

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There are many different methods on how to start a business, but doing so from scratch can prove to be the hardest and riskiest way to go about the task. Franchise opportunities can significantly reduce the burdens and dangers associated with building an establishment from the ground up.

For individuals who are clueless on how to start a business, let alone manage it, most franchisors take care of this issue quite well through training programs and regular seminars. Also, doing so should ideally help the franchisees minimize their operating costs, as well as maximize potential revenue.

However, some franchisors tend to “hype” the benefits of being a franchise owner, while downplaying the potential disadvantages at the same time to sell their products better. That said, there’ll always be good, bad and even surprising aspects with being a franchisee.

The Good

There are plenty of benefits to be reaped from different franchise opportunities for businessmen, but they all share several advantages in common, such as having a reputable and trusted brand name. Another would be the benefit of having reduced advertising costs.

Regardless of the fact that more affordable and superior advertising strategies are utilized, the product itself should sell very well without it, since the brand name has already been established.

Moreover, an effective system of running the business has already been setup. Should anything go wrong, assistance is always made readily available through a team of experts back at the corporate office.

The Bad

One disadvantage that comes with being a franchisee is the need to buy the product line that’s sold to customers, which can lead to lower revenues than that of what was expected by the owner. Though the brand name is well-known, some franchises have products that aren’t, or occasionally roll out new merchandises.

With smaller franchises, franchisees may have to spend more on marketing the unknown or new goods just to make them “click” with the market.

Another setback (in a relative sense) is the need to answer to the franchisor. This can hurt the ego of some entrepreneurs, mainly because a big reason why they engaged the trade in the first place was to become their own bosses.

The Surprising

A big surprise that has struck many franchisees is the level of support rendered by the franchisor, which is topnotch. Not many owners expected the assistance to cover every aspect of their businesses, and also provide comprehensive solutions for any problems that arise.

Other franchisors seem to charge too much for the products sold to customers, which has bothered some franchisees. On the other hand, other branded establishment owners claimed that nothing really caught them by surprise, since ample research on their franchises was conducted beforehand.

Conclusion

The amount of advantages and disadvantages involved will vary amongst the different franchise opportunities, and the buyer’s ability to handle such businesses. Before selecting and purchasing any franchise, thorough research needs to be conducted on both the company and the industry it competes in to ensure financial success, as well as a better management experience.

Purchasing from the right franchisor will always be better than learning how to start a business from scratch, and taking the necessary measures to ensure the establishment’s success plus survival.