If You Want to Own a Franchise, Here’s What You Should Know
As a company dedicated to providing franchise organizations and national brands with the most effective and efficient local marketing automation solutions, we are unsurprisingly frequently asked questions about joining the franchise industry. We are often asked whether it is wise to join a franchise during the recession. The Idaho Stateman just published an exerpt from an article written by our CEO, Pete Gombert in which he addresses this question.
Read Pete’s full article here:
Starting up: If You Want to Own a Franchise, Here’s What You Should Know
Franchising tends to increase during a recession as many aspiring entrepreneurs, driven by layoffs or job changes, finally decide to make their leap. Before leaping, astute future franchisees invariably seek to understand the benefits and challenges they’ll face – fortunately, the benefits are well-documented and accurate, but the most fundamental challenge is too often misunderstood.
Many aspiring franchisees assume that their biggest challenge will be executing within the franchise system, but they quickly find that while running the system is important, the ultimate challenge is translating national strategy to address variables in a local market. Jason Bowman, owner of several Sport Clips franchises in Boise, puts it best: “Franchising is much more than just executing against a system, there are a ton of local challenges and constant adjustments franchisees make depending on the situation.”
Here are just a few of the local challenges franchisees face:
Location. Location can be “everything” and the most important early decision a franchisee makes is often selecting a location. Understanding such things as geography, community planning initiatives, and real estate trends are critical to success.
Competition. Competition varies greatly by region and consists of other franchises, national retailers, mom and pop shops, larger well-established local brands, or alternatives to your product or service.
Employment. Franchisees need to recruit and retain employees that can help build and advance the franchise’s reputation. Dwight Mogford, owner of the Mr. Handyman franchise in Boise, aptly explains, “The face and reputation of Mr. Handyman is largely determined by the people we hire. Though the franchisor can offer guidance, it is up to the franchisee to choose the right people to execute their vision.”
Marketing. Building a brand locally and generating local demand are two key responsibilities of a franchisee. Tactics for reaching an audience can vary greatly by region, often down to the neighborhood level, and understanding the creative elements that work best in combination with the shifting world of advertising media and public relations – such as online, newspapers, and social media like Twitter and Facebook – are all daunting challenges the franchisee must address.
Those are greatly disparate challenges – how can you best address all of them? The key is to look for franchisors that not only have a strong brand and proven system, but also provide solutions that help the franchisee solve local issues. This is where good franchisors separate themselves from the pack and aspiring franchisees should research diligently to determine whether the franchisor offers the following:
Information – franchisors can help share data, best practices, and lessons learned via technology and by connecting franchisees through networking, regular events, and training.
Expertise – many franchisors make experts readily available to franchisees, often for free or at subsidized rates. For example, some franchisors provide real estate consultants for store openings and some provide dedicated marketing professionals in each market.
Execution – franchisors can help eliminate time-consuming, non-core tasks to enable franchisees to best focus on managing their business. Examples of this include recruiting screening tools and marketing fulfillment services or technologies.
It’s important to keep in mind that no matter how good these solutions are, the franchisee’s ultimate responsibility is to drive local strategy by making decisions across a spectrum of business challenges. This leads to perhaps the most important observation I’ve made in working with franchisees throughout the country – franchise success is most highly correlated to the people that run them, and not necessarily to the national brand or system.
The common traits shared by successful franchisees include demonstrated skill at solving a wide variety of challenges and an incredible passion for building a local brand. At the same time, successful franchisees acknowledge they can’t solve all problems themselves, and thus they are readily willing to rely upon the franchise for support. If you think you are this type of person, franchising may be for you – just remember to look for franchisors that set themselves apart with the tools and services they provide.
