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Making a match with franchisees and franchisors
The Salt Lake Tribune
Updated: 08/10/2009 04:44:44 PM MDT
Jodi Rowell, a Syracuse-based consultant for MatchPoint Franchise Consulting Network, says with more than 3,500 franchises nationwide, the search for the right one can be daunting.
What are some questions a potential franchise owner should ask before making an investment?
Do I have enough money? It is one thing to have enough money to purchase a franchise, but another to have enough money to support yourself until the business can start producing some cash flow. Also: How strong is the franchise company? People considering franchising should choose a company that's focused on long-term growth and have several programs in place -- such as a marketing fund to increase brand awareness on a local and national level and a mentoring or coaching program to answer questions and concerns -- to help franchisees succeed. Another question is: Can I follow a system? Following the proven model is the most important factor in franchising. Many new franchisees think they know more than the company and try to change the process. Abandon this mentality immediately. And: Am I comfortable marketing and selling my business? Many people are uncomfortable with this aspect of the business and choose not to do it. When you don't do sales, however, sales don't come in and the business suffers. Choose a business that suits your sales aptitude or be prepared to hire someone who can complete these tasks.
What type of experience does one need to become a franchise owner?
This depends upon the franchise, but most don't require new franchisees to have industry experience. In many cases, they prefer you don't because each franchisor has training systems to help anyone as long as they have the desire to succeed and the willingness to follow a proven system. For example, if you were to start a hair-salon franchise, you don't need to know how to cut hair because the franchisor wants you running and operating the business instead.
Explain the financial investment that's required in owning a franchise.
Every franchise has a price tag, but the cost of each franchise differs. There are three different types of models in franchising -- home-based, office/industrial and retail -- and also three parts to the financial investment -- franchise fee, equipment and materials needed to run the franchise and working capital for the first few months. Franchisors add these expenses together to determine the total amount needed to start their franchise. The total investment range for home-based service businesses is between $45,000 and $90,000. This puts money in the franchisees' pockets faster because they don't have the overhead expenses of a retail location. Office/industrial franchises are more expensive because franchisees have to lease space and need more equipment to run the business. The total investment range is from $90,000 to $150,000. The retail model is the most expensive because of the lease, plus equipment, products, build-out and all other expenses necessary to run the business. This range begins at around $150,000 and can go up into the millions.
How important is the initial meeting with a franchise company?
A good franchisor is going to be just as picky about new franchisees as new franchisees are about choosing the right concept. You don't buy a franchise, it is awarded to you, so new franchisees need to prove that they will positively represent the company and will make the concept work in the given territory they are awarded.
Jodi Rowell, franchise consultant