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Investigation

As more and more people make the decision to enter franchising, there is need for them to understand the need to investigate two major areas:

(1) Self Evaluation, and 

(2) Business Opportunities.

Self Evaluation 

One main reason for success in franchising is the business synergy which is developed between the franchise and the franchisee in the franchise business.  Franchisees as a group can often achieve things that business people as individuals would be unable to do.  Group purchasing power, group advertising, group research, group development are some of the many examples of what can happen.  Are you as an individual ready to begin this quest for success in franchising?

There are many questions which you must ask yourself before beginning a franchise business.  These include 

(1) Will you enjoy the franchise business? 

(2) Are you ready to provide the long hours that will more than likely be necessary to operate the business? 

(3) Are you willing to give up part of your independence for the "security" of a franchise? 

(4) Are you willing to investigate yourself, your habits, and your desires? 

(5) Are you willing to investigate numerous franchise business opportunities? 

(6) Are you willing to follow the franchisor system? 

(7) Are you willing and able to take on the responsibilities of managing your own business?  

(8) Can you afford to franchise? 

(9) Are you willing to study the legal documents of franchising? 

(10) Do you have the family support to franchise? 

(11) Do you personally like the franchisor and the franchisor staff?  

(12) Are you willing to talk to other franchisees about their success in operations? 

(13) Which franchisors do you feel would have the greatest opportunity for success?

We need to go back to question (1).  "To thy own self be true."  Simply buying a franchise would not ensure success.  Franchising requires a lot of hours and energy to begin a successful business opportunity.  The old adage, "know thyself," applies at this time.  Are you willing to follow this endeavor for the next ten to twenty years? 

You need to list down the kind of business opportunities you believe that you yourself would be interested in.  Are you interested in automotive repairing, fast food, printing, or cosmetics?  List down your top five areas and then look at the kinds of franchises which are available today.  List down the names of all franchisors in those areas.

The hours of any business, including a franchise business, are very long, in the pre-start phase as well as the operation phase.  Many new franchisees are surprised to find themselves putting in ten to twelve hours per day prior to opening their franchise business.  They are surprised that during the first year they must continue the heavy workload to ensure the success of their business.  Are you willing to work the long hours which are necessary to provide success for your business?

Franchising is a business relationship.  You will generally be following a business method which others have developed.  You may find yourself too headstrong to operate in a franchise relationship.  You will find that you give up a measure of your independence for the "security" of a proven business opportunity.  You may have to be open a certain number of hours for a certain number of days.  Seven-Eleven suggests that their franchisees be open twenty-four hours a day seven days a week. 

A myth often found in franchising is that franchise ownership is easy.  Not true.  The franchisee must be prepared to provide the time and effort which is necessary to properly manage the business.  Some franchises do provide for absentee owners but almost all franchises are best run by hands-on management.  This will require you to possibly work harder than you have ever worked before.  Forty hour weeks are often a myth in franchising.  It is more likely that you will spend sixty to seventy hours a week during the first year or two of your franchised operation.  You will find that you personally will be mopping the floors, cleaning the wash basins, emptying the garbage, and hiring and firing employees.  You are the one who will be responsible for upset employees and customers. 

You will need to carefully study the legal documents of franchising including the Uniform Franchise Offering Circular (UFOC) and the attached franchised agreement or contract.  The UFOC contains information about the initial franchise start-up cost, and the history of the franchise organization.  It also contains the franchise agreement  (contract) that you will sign.  This agreement is written in heavy legalese, nevertheless, it will govern the relationship which you and your franchisor will have for the next several years.  The UFOC is probably the most important document that you will receive prior to becoming a franchisee.  You need to be willing to study it, analyze it, and understand its 23 component parts.  You should study this document by yourself as well as with your attorney to help you understand the fine points of franchise contracts. 

Family support is a must for the successful franchisee.  Franchising requires great sacrifices-personally and with family time.  The family needs to understand the tremendous demands which will be placed on your time as well as the possible rewards associated with success.  The husband, wife, and children need to be supportive of the decision to buy a franchise. 

Franchising is a relationship between two parties involved in a business opportunity.  You will be working personally with the franchisor and their staff for a number of years.  You need to be able to enjoy that relationship and to trust the individuals with whom you work.  You should want to work with them and to enjoy their advice and recommendations.  You should feel comfortable with these people and be able to interact with them on a friendly and professional basis. 

You will need to contact other franchisees - at least ten of any franchise business that you seriously contemplate obtaining.  Franchisees are other individuals who have also decided to serve as independent business people in developing their franchising experiences.  You will not find all franchisees to be supportive of their franchisor.  Most franchisees do enjoy their business.  You need to inquire of them about their business experience and opportunities. 

Does the franchise business that you are contemplating have a history of success in both their franchise operations and in dealing with people?  Franchisors deal not only with franchisees but with their own staff as well as different suppliers.  You should feel free to contact anyone involved in the franchise loop and to work with them to find out if this is a happy and successful business operation.  

Financially, are you able to support and purchase this franchise?  A general RULE OF THUMB for most franchisors is that any franchisee must be able to pay out-of-pocket the beginning franchise fee, and generally should be able to provide 50% of the total start-up cost from their current cash flow.  A major cause of business failure is under capitalization.  The franchisor will provide you with a good idea of the start-up costs and these are found in the UFOC.  These often vary though according to required lease hold improvements and geographic conditions--the cost of land in downtown New York is at least ten times the cost of land in Lubbock, Texas.  You will need to obtain sufficient money to not only open the franchise but to run it until it is profitable.  The return of the initial turnkey costs for most franchisees is somewhere between two to five years.  That means that in many large restaurants and convenience food stores it may take five years before you can get back your initial investments.  It is better to start with more money than you think you will need than less. 

The purchasing of a franchise is not a guarantee of success.  You must realize that you hold within your own hands and heart the essentials for success.  You must be your own worst critic as well as your your best supporter.  You must be willing to totally commit your time and talents to the development and strengthening of your franchise business.  Only you will make it a success or failure.

Consider the following old fable:  Once upon a time there was a wise old hermit, a sage, an oracle - who lived in the foothills of a small town.  The boys of the town would spend countless hours visiting with the old man listening to his tall tales and his great wisdom.  Whenever they had a complex problem, they could count on this old man to give them a wise answer.  They were never able to stump him.  This bothered the non-believers in the group and they determined to construct a question that he could not answer.  They were watching a bird one day and this gave them the idea.  They determined that they would go to the old man with the bird in their hands and ask him this question. "Old man, we have a bird in our hands, and we would like to ask you one question.  Is this bird dead or alive?"  If the old man replies that the bird is dead then we will uncouple our hands, release the bird, and the old man will be wrong.  And if the old man replies that the bird is alive then we will crush him and show him to be dead.  After a moment of deep thought, the old man replied, "Young man, the answer is in your hands."

The opportunity of franchising success is in your hands.  There are not too many franchise failures, but there are people who fail.  You need to evaluate carefully yourself, your vision and your desire.  By doing this correctly your dream of business ownership and success can be yours.