Tag Archives: franchises for sale

Common Franchisee Mistakes to Avoid – Part II

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With innumerable franchises for sale across industries, the opportunities are plentiful but it has become increasingly difficult to pick the right venture to get into. To buy a franchise is definitely less risky than a startup from scratch but it’s not immune to failures either. When you get into operating a franchise, there are essential factors to take into account such as franchisor’s agreement and support, equipment costs, business model and brand history and performance to mention a few.

Understanding these key components will help you steer away from common franchisee mistakes that can make or break your business venture. Some mistakes to avoid include:

1. Not creating a frugal budget plan and not having enough capital to jumpstart the business. New ventures are expected to rack up steep startup costs but there are ways to lessen the blow. Equipment costs, for one, can be lessened by scouting for low cost options with equal quality. Do not simply rely on recommendations from your franchisor. After you buy franchise, the business is essentially ready for operation but make sure you have sufficient capital and a sound financial plan to keep it afloat until it get past the startup phase.

2. Not sticking with the business model provided by your franchisor. Exploring other cost-effective ways to do business is good but you can try to strike a balance. Most franchises for sale come with its own franchising system because it has been proven to translate into profits. This is also one of the reasons why you got into franchising in the first place because it eliminates the need to create your own business mode from scratch. Instead of ditching your franchisor’s business model, follow it through but stay flexible.

3. Not taking the time to read and understand the Franchise Disclosure Document (FDD). As a franchisee, it is your right to see the FDD as mandated by law. Before you invest and buy franchise, it is highly recommended to go through the document that will tell you of your franchisor’s turnover, sales history and cases of litigation if there’s any.

4. Not seeking franchisor support and failure to talk with current franchisees about the pros and cons of the venture. Don’t hesitate to seek out fellow franchisees. If you cannot get enough information from your franchisor, one of the best ways to acquire the details you need is through business owners who have already done it. Once the deal is done, make sure to take advantage of franchisor support and assistance. Most franchises for sale nowadays have support programs designed for franchisees to encourage them to invest. It’s only right to get as much help as possible until your business gets off the ground.

Hiring the Right Staff for Your Franchise

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No matter how promising or attractive the business venture is, you cannot run a one man business. After choosing the suitable type of business among a plethora of franchises for sale in the market, the next step is marketing and hiring the right staff. While most entrepreneurs are focused on profitability, it is as important to dedicate time and resources on planning the aspect of staffing your business to ensure that the franchise opportunity you took on will be sustainable in the long run.

Start by establishing the budget you can allot for staff payroll, it will follow to determine the number of employees your franchise requires to operate smoothly. It’s important to strike a balance here, meaning you cannot afford to hire too many people while being understaffed is not desirable either. Too many help will only eat up your profits but too few employees and you’ll end up with overworked and stressed staff. This may lead to poor customer service which can hurt your business.

Depending on the franchise opportunity, determine the different roles you’ll need for the business. Clearly define each role, if you must, write down a detailed job description covering daily tasks and responsibilities. When you’re upfront with your expectations, it will help find a team of employees that are qualified, skill and perfectly fitted for each job description.

Set-up a screening process that will segregate the good from the great then set-up interviews with your prospective candidates. If you don’t know where to begin, seek help from your franchisors. Most brands that offer franchises for sale often include assistance for franchisees to get them started smoothly. Franchise agreements also include regulations and guidelines with regard to staffing, sometimes even specifying employee uniforms. It’s best to double with your franchisor to get the details right and to stay within the boundaries of the deal.

Just like choosing the best business from numerous franchises for sale, you need to carefully choose your help. This means the hiring process should be done early on, not until the last minute. Whether you’re looking for temporary help or full-time employees, considerations of the season and the busyness of the business operations are important factors to take into account. You’ll need adequate time to screen, interview and train the candidates. And by starting an early search, you also guarantee an early opening day for your franchise opportunity venture. Ideally, you should only open your business to the public if you have a full staff ready to cater to your customer’s needs and demands.

Questions to Ask Before Making a Franchise Decision

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A franchise is an excellent way to capitalize your opportunities and exercise your skills in entrepreneurship. Before buying your own franchise, it is necessary to get familiar with the type of business you are interested in by coming up with the right questions for the franchisor such as the following:

1. How many franchises are there and where are they situated?

This provides you an idea if the area has other franchises such as automotive franchises that might put your business in direct competition. Knowing this will help you assess if the location is profitable or not.

2. Are training and assistance provided?

A number of franchisors provide assistance and training to new franchisees to start the business and have it running successfully. Sometimes the training is not free so better inquire if additional expenses would be needed.

3. What are the initial and long-term fees and costs?

Some franchisors charge upfront fee so you have to prepare for it before you start franchising. You need to have an appropriate fund to pay for additional fees and other expenses throughout the duration of the business. You also need to ask your franchisor regarding the royalties you have to settle, if there are any.

4. How are other franchisees treated?

Talk to other franchisees to learn the pros and cons of the franchise that you are interested in. They can provide you answers regarding the business instead of asking the franchisors who are more likely to sugarcoat everything.

5. What is FDD or Federal Disclosure Document?

Franchisors are required to provide FDD. The FDD contains the company’s litigation history, which lets you know if the franchisor has been involved in lawsuits or if the franchisor has filed for bankruptcy before. Knowing the franchisor’s financial competence and the risk that you have to face when you purchase the franchise is a big help.

6. What is the previous profitability of the franchise?

Analyze the franchise’s profit margins to know if the business is worth investing in or not. Seek a legal professional to analyze the franchise’s earnings so as not to be misled.

7. What are the restrictions?

When you buy a franchise you are expected to adhere to its restrictions. In most cases, you have to give up and sacrifice your business-oriented freedom and follow the established business model.

Starting your own franchise can be profitable however you need to operate by certain guidelines and rules, which can either help you or hurt your business. As a buyer, you need to spend more time researching on the franchises for sale prior to buying one and the questions provided can help you a lot.

How to Succeed as a Veteran Owner of a Small Business

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It is common for military men and women to be unemployed after returning from their active duty. If you’re one of them and are thinking of entering the workforce to re-establish your life, you might like to consider utilizing your entrepreneurial skills. One of the first steps you can do to find employment and fulfillment upon your return is to start a business or buy one of the business franchises for sale.

There are a number of veteran services that are available to people who have interests in this type of work. Several of these services are provided by government organizations. One of the groups that can help individuals who are interested in opening a business is the Department of Veterans Affairs or VA.

Owning a business

According to the VA reports, the first thing to consider toward owning a business is creating the ideal plan for the company. To do this, you need to generate ideas on all aspects of business ownership including the products and how the company can acquire business funding. There are Small Business Dev’t Centers associated with the US Small Business Assoc. that can provide help in creating a business plan with great potential for success.

A number of mentoring programs and counselors are also available to provide the veterans free services. Both inexperienced and seasoned entrepreneurs can greatly benefit from these services.

Starting a business franchise

If you think that starting a business of your own does not suit you well, then you can consider buying a business franchise. With a franchise, you will be able to own and start a business that is part of a bigger company that has already established its name in the market. Typically, franchisers provide training and funding for their franchisees, which are necessary to help your business franchise achieve its goal to become successful.

Online resources

One website that you can visit to learn more about the franchising world and how to be a part of it is the VetFran.com. This site is dedicated and passionate in helping the veterans find the suitable franchise opportunities for them. The site also provides resources and training to novice entrepreneurs. The VetFRan.com site aims to assist veterans in becoming the top business owners when it comes to the industry of entrepreneurship.

The IFA or International Franchise Association is VetFran’s parent company. IFA is also dedicated to helping the veterans excel in their chosen entrepreneurial ventures by providing them the needed tools and resources to succeed.

Franchisors and Franchisees Worrying about Fiscal Cliff

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While franchise opportunities have served as an outstanding median for ordinary folks to own and run businesses with or without entrepreneurial experience, the shadow cast over franchising by the budgetary fiscal cliff deal is causing a stir amongst both franchisors and current franchisees.

Companies selling franchises for sale across the US claim that growth at their hotels, restaurants, retail shops, and other small businesses are likely to be impacted by tax hikes, as well as the more expensive health care rules.

According to the International Franchise Association’s economic outlook survey for 2013 – which was released before the Democrats and Republicans finalized their dealings — business growth for this year is bound to slow down even if the Congress and White House manage to come to an agreement on spending cuts and tax hikes.

“Franchise companies are poised for growth, but many of us are standing by, waiting to see what our economic policy is going to be in this country,” said Steve Joyce, president and CEO of Choice Hotels International.

“We want to grow. We want to hire. But how can you be a responsible business leader and make decisions if you don’t know what the rules are going to be?”

Joyce’s statement was made before the fiscal deal was finally settled, and unfortunately, the deal ended up disproportionate, as it entailed more taxes levied on the wealthy and middle classes, and no government spending restraint.

Despite the fact that franchisors would like nothing more to accelerate their growth plans, current economy problems are making that a little more difficult than it ought to be.

“We could be growing much faster, creating more new jobs and businesses, if Washington addressed the tax, spending and regulatory uncertainty plaguing the small business community in a meaningful way,” said Steve Caldeira, president and CEO of the IFA.

Caldeira explained that excessive government spending is causing a strain on the economy, and if the country’s leaders fail to address this issue (because they so far haven’t), their growth rates will be impeded for the start of this year.

This larger strain placed on Americans could either make them more open or closed to plausibility of improving living conditions through franchise opportunities. Studies show that the number of franchises of sale that are actually purchased are likely to decrease slightly this 2013.

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.

Fast Food Can Be Healthy and Tastes Good

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Several franchises for sale which have recently emerged are exploring a new market niche: fast food offerings that are not only healthy but also taste delicious. And here they are and what they offer:

O’Naturals

The prime mover of this company is its founder and chairman, Gary Hirshberg, who is also president and CEO of Stonyfield Farm, a yogurt manufacturer. O’Naturals was established along the same philosophy that Stonyfield yogurts are being made, that is of solely using natural and organic ingredients. The ingredients in O’Naturals’ menu contain no preservatives or additives. They also don’t have artificial sweeteners, flavors, and coloring. In-store nutritional information is provided in all of O’Naturals fast food offerings.

Furthermore, selections for customers on restricted diets, e.g., gluten-free, dairy-free, low-carb, etc., are also highlighted. Patrons are informed on what their food contains as all of the ingredients for each menu are listed on cards at the line. The items in the O’Naturals’ menu include build-you-own-sandwich/salad, featured tossed salads/ flatbread, sandwiches, flatbread pizzas, a selection of Asian noodles, soups, natural fountain soda, and Stonyfield Farm organic smoothies. O’Naturals currently operates four company-owned stores inNew England. Two franchise opportunities are being finalized outside this region.

Salad Creations

This is one fast food franchise venture that has really taken off. Salad Creations already has nine locations inFlorida,Virginia,Ohio,Rhode Island, andMexico. One of these is company-owned store the rest are franchised stores. In these outlets, customers can create their own salad from a choice of over 40 ingredients consisting of farm fresh fruits, vegetables, newly sliced meats, cheeses, and more than 15 homemade salad dressings. Each customer’s order is prepared by specially trained salad chefs who can help customize the servings to each individual’s preference.

Blendz

Customization of salads or smoothies is also the growth driver for outlets under the Blendz Franchise System, Inc. The company’s founder, president and CEO, Matt Phipps says that they don’t claim their food as healthy but healthier, allowing customers the option to make it as healthy as they want. The choices in Blendz menu include not only create-your-own-salad with 15 different toppings and dressings each day, and choices of greens. Also in the list are featured salads, gourmet soups, fresh squeezed juices, and grilled Panini. Blendz has four company-owned locations and one franchised outlet. Another corporate store and two franchisees are also under development.

Fresh Pita Pits Franchise Expands Phoenix Presence

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The Idaho-based Pita Pit is poised to test its mettle anew on how to start a business in Phoenix this 2013. Ranged against competitive fast-casual restaurant franchises, Pita Pit is set to open several outlets for its sandwiches in Phoenix early this year. An Arizona couple, Todd and Blanca Runyan, is at the forefront of this bid, having signed a franchise agreement to bring to the Valley 11 Pita Pit locations.

One outlet is scheduled to open early this year on Mill Avenue in Tempe. In December, the couple opened a Pita Pit outlet in Yuma and is now training their eyes on the Phoenix area. If their plans pan out in the Phoenix market, Todd Runyan said they expect to open from two to four Pita Pits outlets a year in the area for the next several years and eventually exceed their initial target of 11 locations. Once those 11 outlets are operating, the couple hopes to do more, and 22 different locations are already being scouted, he added.

Each of Pita Pit’s Phoenix location will have 15 to 20 employees. The other brand players in the local fast-casual sandwich franchises for sale include Jimmy John’s Gourmet Sandwiches and Subway. Pita Pit differentiates itself from competitors by using pita bread on its sandwiches. The healthful feature of the Pita Pit sandwich is one of the major factors which drew the couple to the franchise. This is healthier food, really good, and portable, Todd Runyan said, adding that it is a little bit on the lighter side but is still filling.

Pita Pit’s vice president of franchise development, Corey Bowman, confirms this observation, saying that the key differentiator of his company’s product is its healthful feature. Besides this selling proposition, Pita Pit allows customers ample choice on how to customize or build the sandwich to their own liking, Bowman said on the strength of his company’s franchise for sale.

Prior to the Runyans’ franchise agreement, Pita Pit already has a presence in the Phoenix market. A separate franchisee operates a location in north Phoenix on Happy Valley Road. Another in operation on Tempe’s Mill Avenue has been closed but will soon reopen as the first Valley location for the Runyans.

Other fast-casual restaurants which have recently sprung up in the Phoenix market include Chicago-based Potbelly Sandwich Shop, Delaware-based Capriotti’s, Pennsylvania-based Saladworks, and Wisconsin-based Cousins Subs. Likewise, San Diego-based Fresh Healthy Vending which sells franchises on health-snack vending machines, has begun expanding its presence in Phoenix.

How 2012 Will Shape 2013 Franchises

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The year 2012 was filled with events in the franchise industry that will contribute much in steering its path in 2013 and further into the future. Likewise, there were also milestones set last year that allow some glimpses on the track that the industry will take as its players explore the many franchise opportunities available in the market. Here are some of these developments:

Forward-looking tie-up:

Edible Arrangements forged a strategic partnership with the private equity firm Catterton Partners which mainly provides equity capital to consumer companies. Serving small to middle consumer market companies, Catterton also has an investment stake in Bloomin’ Brands whose portfolio of brand franchises for sale includes Bonefish Grill, Outback Steakhouse, and Noodles & Company.

Executive movements:

Jonathan Fitzpatrick took over as president and CEO of Driven Brands, Inc., replacing Ken Walker. Based inNorth Carolina, Driven Brands is the parent company of Maaco Collision Repair & Auto Painting andMeinekeCarCareCenters. The leadership change followed the purchase of Harvest Partners of the majority stake in Driven Brands under a recapitalization transaction.

Stuart Mathis was appointed president and CEO of Quiznos, replacing Greg McDonald who spent fourteen years at the helm of the company. Mathis was formerly UPS Store chain’s president, and he also spent some time as a franchising executive for Dominos Pizza.

Expo shifts to new venue:

The largest franchise expo in theU.S., the International Franchise Expo, was held at theJacobJavitsCenterinNew York City, in June, breaking the twenty-year tradition of having the event inWashington,D.C.

Equity restructuring:

The initial public offering (IPO) of CKE Inc. was postponed because of “market conditions.” Based inCalifornia, this company owns Hardee’s and Carl’s Junior. The private equity company Apollo Management took the company private two years ago for just below $700 million. Public shareholders would have held just 24 percent of CKE had the IPO pushed through.

Panera Bread undertook a new $600-million share repurchase program. This scheme replaced a $600-million three-year buyback program launched in 2009, of which more than 50 percent remain untapped.

Atlanta-based Roark Capital Group bought Massage Envy from another private equity company, Sentinel Capital Partners, which had acquired the fast-growing wellness franchise just 33 months back. Besides Massage Envy, Roark’s portfolio of franchise companies now includes Bosley’s Pet Food Plus, Arby’s, Corner Bakery, FASTSIGNS, FOCUS Brands, Money Mailer, McAllister’s Deli, Primrose Schools, and Wingstop.

Franchising Basics Explained

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It is a wise move for those who want to buy a business franchise to avail of the services of a competent franchise attorney and a financial adviser. But even prior to seeking such services, prospective franchise buyers should already be knowledgeable on the basics that are involved in operating franchised outlets. Many of these fundamentals are covered by information covering some frequently asked questions on franchises for sale. Among these FAQs are:

Q. Where can franchise opportunities be found?

A.  Franchises are advertised in many ways. There are franchise directories which can be accessed on the Internet. Others can be found in traditional magazines and publications on franchising. Through these listings, prospective franchisees can initially gauge the business that is best suited to their talents, skills, or abilities.

Q. What is the Franchise Disclosure Document (FDD) and why is it important?

A.  The FDD enables a prospective franchisee to analyze the franchise and the franchisor. It is a legal document that the Federal Trade Commission (FTC) requires the franchisor to furnish to franchisees. This document must be furnished to the franchisee applicant at least 10 days before the franchise agreement is signed.

Q. What government agencies, besides the FTC, regulate the franchising business?

A.  Although franchises’ offerings and sales are generally regulated by the FTC, 14 state governments also regulate franchising in areas under their jurisdictions. Additional franchise regulations and oversight are sometimes imposed in these 14 states in order to extend an extra protection layer to prospective franchisees. These states areCalifornia,Illinois,Indiana,Maryland,Michigan,Minnesota,New York,North Dakota,South Dakota,Oregon,Rhode Island,Virginia,Washington,Wisconsin, andHawaii.

Q. Can prospective franchisees ask about potential earnings from franchisors?

A.  Information on how much money a franchisee can potentially earn may be found in the FDD. Franchisors’ disclosure about franchisees’ sales or earnings is not allowed unless that information is provided via the FDD. It’s been estimated that this information is provided in about 25% of the franchisors’ FDDs.

Q. Can this information on potential earnings be sourced elsewhere?

A.  Current franchisees are the best source for this information. Although detailed information may not be provided, what they can provide are ranges of sales or earnings that a franchise applicant can use as a basis to work with. These data are useful in financial projections at varying sales levels.

Q. Can financing offers be expected from franchisors?

A.  The possibility of receiving a financing offer from most franchisors is remote. The best thing that they can do is arrange for third-party financing.