Franchise Management For Dummies. Mazero Joyce

difficulty for some individuals.

      

A franchisee is not buying a franchise. They are investing in the right to use the business system of their franchisor. The only thing they are buying is the hard assets necessary to start and support their business.

      New business owners have a choice to make: They can choose to become an independent business owner and steer their own course, or they can invest in a franchise opportunity. If they choose the latter, the products and services they will be selling and how they sell them will be decided by someone else. As discussed in Chapter 1, successful franchisees are not entrepreneurs yet still need to exhibit entrepreneurial qualities. In franchising, that preferential profile is called a formula entrepreneur. Deciding on whether to start your own business or becoming a franchisee depends on a lot of factors – most important is your personality.

      If independent decisions and your needing to make the decisions on every detail of a project are essential to you, you likely should start your own business and not become a franchise. If it’s essential to you to create every element, and deep down you know you will have difficulty following someone else’s direction – especially when you may not agree with them – franchising is not right for you.

      Maybe you might make a better franchisor than franchisee if you have an innovative product or cutting-edge service that is currently not being offered to consumers, or you have a better way than what’s currently available in the market for providing an established product or service, you may be better off striking out on your own. You might even want to start your own franchise system, and if you do, giving either of the co-authors of this book a call would be a logical path for you to take. However, the point we are trying to make is that although franchising can be an outstanding way to get into business, it’s not right for everyone.

Consider the Pros and Cons

      You may occasional see franchisors or franchise brokers using generalized statistics about the success of franchising. These statistics were based on studies by the U.S. Department of Commerce or the U.S. Small Business Administration conducted in the 1980s and 1990s that misled potential franchisees by making them think franchising was a surefire, safe investment, regardless of the franchisor. The International Franchise Association has asked its members and the press to no longer quote those statistics.

      Most franchisors will publish statistics about their own franchise systems, and that information can be instructive and very beneficial because a well-designed franchise program can be an exceptional investment. But cookie-cutter franchise systems that are poorly managed are not good investments and need to be avoided. If any franchisor or broker quotes from these out-of-date and misleading industry success statistics, our best recommendation is for you not to do business with them and move on. Most franchisors are legitimate businesses looking for qualified franchisees. These franchisors don’t mislead prospective franchisees by quoting discredited industry statistics.

      Let’s instead consider some of the advantages and disadvantages of your making a franchise investment.

       Advantages of making a franchise investment

      Your chance of success in franchising can only be as strong as the franchise system you select and how well you manage your business. Well-structured and managed franchise systems that support their franchisees generally offer the benefits discussed in this section.

       Overall competitive benefits

      The public has become accustomed to a certain level of quality and consistency when shopping at any branded locations (see Chapter 2 for more on this phenomenon). What we mean by branded location is a business that the public thinks of as a chain because each location has the same name, décor, products, services, menu items, and so on. In a branded location you expect that the customer experience will be the same regardless of the location.