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7 Things You Need to Know Before Becoming a Franchise Owner

Recently, I was sitting, drinking an iced latte macchiato at a well-known chain, when my wife said to me, “We spend so much time in here that maybe we should think of starting one ourselves.”

Which she promptly followed up with, “I’ve always wanted to run my own business, and let’s face it: How hard can making lattes be? Everywhere we go, [this chain is] opening a new franchise. So, it’s got to be an easier option than starting my own business right?”

Well, not exactly.

My wife is not the only one to think the way she does, given that franchise-growth rates in 2016 again exceeded non-franchise business growth rates and continue to increase by 2.6 percent per year. There’s reason for this, specifically the 300 franchise business lines that already cover ten distinct business areas (automotive, business services, commercial and residential services, lodging, personal services, quick service restaurants, real estate, retail food, retail products and services and table/full-service restaurants.

So, not only are there a lot of franchise categories and companies to choose among, but there are advantages to opening a franchise as opposed to starting your own business from scratch.

Still, those choices and advantages don’t mean a franchise is a guaranteed success. To get to that point, you still need to do your due diligence to increase your chances of making it work.

To better grasp the challenges of running a franchise, I met with Tom Portesy, CEO of MVF Expositions, which runs franchise expositions around the world. I asked Portesy his thoughts on what a new entrepreneur should know before taking on this challenge.

Here are the seven things he said to be aware of before you dive into that franchise opportunity.

1. How much will it cost?

The first thing to know is the total investment to get your franchise up and running. This should include the purchase costs, your opening inventory and the amount of working capital you are going to need before you break even. Understanding these costs is crucial, as you don’t want to run out of money when you are on the verge of success.

In addition, you also need to know how you are going to finance the business, as many people can actually afford a bigger franchise opportunity than they think.

2. What are you good at, and what are you passionate about?

You don’t have to love coffee to open your own franchise coffee shop. Nor do you have to do all the work.

When it comes to running that shop, you’re actually the business owner and can hire people to deliver the service or sell the products; you don’t have to do all of that yourself. Success is dependent on how well you work on the business, not just in the business. 

Still, not everyone is cut out to be a franchisee, to thrive within someone else’s system. “Before buying a franchise,” Portesy told me, “one of the most important questions to ask yourself is, “Do I have the right personality to be a franchisee? People are all different, and so are franchises.

“As a result, one of the worst mistakes you can make is buying a franchise when you are not suited to be a franchisee, or compatible with the business.”

3. How much time do you need to invest?

While starting a franchise is different from starting your own business, it is still a business, and you won’t be the first person who’s traded a 10-hour-a-day job he (or she) hated for a 16-hour-a-day job he hates.

So, make sure you understand what’s involved. There are seasonal franchises that require you to work especially hard at certain times of the year; but it’s still your business that you’re going to be running, and you need to be clear about how much time you will need to invest to make it a success.

4. What is the franchisor like?

Not all franchisors are the same, so you need to do your research and get to know everything you can about the franchisor. This includes things such as how long has this company been in business, what is its average success rate and how long do franchisees stay on average.

Just because a franchisor is new doesn’t mean it’s not a great opportunity, but the more you know, the better informed your decision can be.

5. What does it take to run a successful franchise?

When you do your due diligence, make sure that you speak to other franchisees and not just the most successful ones. Ask them:

  • What were the key success factors they found?  
  • What were some of the challenges, and how’d they overcome then?
  • If they were starting today, knowing what they now know, what would they do differently?
  • For those that failed, what were the factors that caused that to happen, e.g. poor location, weak marketing, etc? 
  • How long did it take for them to start to make a profit?

It’s great to learn from your mistakes. It’s even better if you can learn from those of others so that you don’t repeat them.

6. What kind of help does the franchisor provide?

When you take on a franchise, unlike starting your own business, you’re not alone, and that can be a great comfort. Just make sure you know how much support you will get from the franchisor, what other people’s experiences were and how much help the company offered those people when the going got tough. How much support did those other franchisees receive, or were they left to their own devices?

One of the hardest things is asking for help when things are going wrong. But if you know that the support will be there and that the franchisor is willing to help, the process will be a little easier.

7. What’s your end game?

I am a big fan of Stephen Covey’s “second habit” of highly successful people:  Start with the end in mind. 

plies to franchising. Before you take up your franchise, know and understand what your exit strategy is going to be. Are you planning to leave the franchise to your children, are you looking sell it or do you plan to just run it for a couple of years and then get out?

The better you know and understand your end game, the easier time you’ll have selecting the right kind of franchise opportunity, which fits you in the short term, and supports your long-term objectives.

Running a franchise can be a great way to start running your own business, but you need to understand why you are getting into it, what you are getting into, whom you’re getting into it with and of course how you plan to get out of it. The better you understand the answers to these questions, the better your probability of selecting the franchise segment and company with the best potential for you.

By Gordon Tredgold

Original article from Entrepreneur.com, November 22, 2017

Why Becoming a Franchisee Offers the Best of Both Worlds

Partnering with the right franchise can help an entrepreneur reach their dream of financial independence—without the common pitfalls.

According to the U.S. Census Bureau’s Survey of Entrepreneurs, the key drivers for entrepreneurship are earning more income and the desire to be one’s own boss.

No surprise there.

As the chief development officer for Überrito, I see that every day in my efforts to drive franchise sales and development for the company. My daily interactions are with highly motivated individuals looking to grow their income while maintaining their autonomy by working for themselves.

To be sure, the lure of independence and the ability to control one’s destiny has created many a entrepreneur.

However, there can be considerable unforeseen pitfalls along the way:

Lack of guidance: Many entrepreneurs will tell you, it can get lonely at the top. It helps to have someone with experience in all of the aforementioned areas—and many others—that can provide guidance and examples of what has worked and what has not—and why.

Building a customer base: Everyone thinks they are a marketing expert, but it is easier said than done. Marketing is part art and part science, and it’s important to get it right to be successful. When the time comes to develop and execute marketing strategies that will bring foot traffic to your door, and keep those customers coming back again and again in a crowded marketplace, having access to a team that has a strategy that is successful and repeatable is extremely valuable and is a key to success.  

When you consider the advent of Twitter, Facebook, Yelp, and more, there are countless ways to reach customers. Geotargeting and other methods can be much more precise in promoting your brand and measuring results. Social media is constantly evolving and while it can be extremely positive, there are also just as many ways for it to have a negative impact.  

It makes less sense to swim upstream alone in such a noisy, fragmented marketplace. Tapping into the marketing resources of a franchise enables entrepreneurs to focus on day-to-day operations, and, profitability.

Unforeseen start-up costs: A blank slate is difficult to build from. If you are negotiating a lease, or choosing a contractor to build a storefront—the margin for error is thin and will impact your business for years. It doesn’t take much to come out of the gate in a deeper hole than anticipated.

Furthermore, the amount of decisions to be made in terms of location, layout, and finishing touches can be paralyzing. If you are going to operate a storefront, it can be useful to rely on experts regarding items such as traffic flow, point-of-sale considerations and more.

Human Resources quagmires: Most entrepreneurs are driven by success. They like to set goals and then attain them. The endorphin rush from making a sale or achieving purchase goals is hard to beat.

But nothing disrupts such positive momentum more than navigating complex human resources issues. While these are important issues that must be resolved, they can become burdensome, and get in the way of making sales. They are often fraught with legal considerations and are best left to those who are up to date on labor laws and best practices.

Beyond managing current employees, attracting and hiring the right ones presents its own challenges. A national franchise can be a helpful resource on many of these issues.

Distribution and Inventory control: It is a simple concept that you cannot sell what you do not have. Yet one of the most critical mistakes a business owner can make is having an incorrect amount of inventory, whether that is having too much or not enough. This is critically important in the food-services industry where product can often have a very limited shelf life.  Over ordering product often results in spoilage while under ordering results in unhappy customers and a loss of sale.

Even if you do not have product that can spoil, all products have a shelf life to consider. Timing is everything and it is of great benefit to have an idea as to what to expect and what has worked for others.

Finding distributors to supply your raw material needs—especially if those needs include fresh food items—can be difficult and costly if you are operating alone. Having the purchasing power and relationships afforded by a franchise eliminates guesswork in choosing distributors and promotes favorable costs. 

Financing considerations also come into play here. Depending on the carrying cost it may be that alternative financing can be provided through a franchise, often at more competitive rates and terms than what a traditional bank offers.

This is a small sample and many of these misadventures can be mitigated when partnering with a proven franchise.

While these issues can pose a significant challenge to a startup, it is very likely these issues have already been considered and solved on a franchise level.

A franchisor is aware of all the nuances and challenges franchisees may encounter. Much of this knowledge is taken into consideration when removing or alleviating barriers to entry.  This experience also better positions franchisees for success due to the systems that have been tested and put in place.

A franchise only does well if its franchisees are doing well and it is in a franchise’s best interests to help its franchisees succeed.

Partnering with the right franchise provides a stronger likelihood of your reaching your dream of financial independence—without the common pitfalls that plague many entrepreneurs.

By Peter Ortiz, September 2017

Original Article from QSRMagazine.com

Peter Ortiz is the Chief Development Officer for Überrito, a fast-casual concept that is part of Mexican Restaurants Inc., which currently operates 47 Mexican restaurant locations across five brands: Überrito, Casa Ole, Monterey’s Little Mexico, Tortuga Mexican Kitchen, and Crazy Jose’s.

We asked David Buckley, chief marketing officer for Sears Hometown and Outlet Stores, the following question: “How do you stage a successful new store grand opening, soup to nuts?” Here’s what he had to say.

The first step to a successful franchisee grand opening is disciplined advance planning. Our planning begins with a review of our cadence for chain-wide promotional offers to select a date where we will have the most attractive offers in the marketplace. A successful grand opening is built upon a solid promotional offer. Once we have selected a date for our grand opening, we will execute multiple grand openings on the same date to drive operational efficiencies. This allows us to increase the effectiveness of our budgeted investment for the event. With advance planning we are also able to leverage our existing media, versioning the advertising to support grand opening markets.

With the national support media and promotions finalized, the focus turns to building local awareness and hype. Franchisees are provided with a complete grand opening signing package that includes interior signing, exterior banners, and adversails. To prepare locally for the event, the franchisee plays an important role in engaging with the community. As the grand opening may be the franchisee’s first retail store in our business, their district sales manager plays a significant role in building a local action plan to ensure a successful event. To aid the franchisee in promoting the event, we have developed an online portal allowing the franchisee to customize a wide variety of local marketing assets. The assets to be activated locally are selected by the franchisee and include ROP templates, EDDM (Every Door Direct Mail), local flyers, real estate signs, and door hangers.

Digital advertising and social media also play an important role in a successful grand opening. Pre-opening, we ensure data is correct and that the location is properly represented in more than 30 different major websites including Google, Yelp, Yahoo, Superpages, MapQuest, and Yellowbook. As the event approaches, promotional messaging is posted to each of the sites that have that capability. For social exposure, each store launches with a Facebook page, which the franchisee is encouraged to use to engage fans with pictures and stories from their journey of building their store.

The final piece to kicking off a strong grand opening includes a local radio station remote broadcast. Partnering with a radio station builds awareness through the associated radio commercials and promotional mentions, and the radio station also builds some excitement on the day of the event. Great radio partners will help make the event come alive with high-visibility tents and vans, as well as activities and giveaways throughout the day.

For our business, the successful event combines advance planning, strong traditional and digital integration, local excitement, and most important… franchisee engagement.

Article from Franchising.com

Having worked with an array of different franchises over the years, we can say that from personal experience franchising your business can be a lucrative path. However, not all businesses are ready to be franchised – now or in the future. There are many exterior factors that come into play when making this decision, but one of the most important questions you need to answer from the get-go is: “Will our franchisees be able to earn a profit?”

A franchise business must be profitable. But a profitable prototype is not enough. A franchise business must allow enough profit after a royalty (or any other fees or incremental product markups) for the franchisees to earn an acceptable return on their investment of time and money. So a business that offers an acceptable return to you as an entrepreneur may not provide adequate returns to your franchisee once you have assessed your fees as a franchisor.

Profitability, of course, is relative. A franchisee’s profitability — either as a stand-alone dollar amount or a percentage of sales — isn’t the relevant number. Profitability must be measured against the capital invested to provide a meaningful number. A franchisee who invested tens of millions in opening a hotel franchise might be very upset if they made a return of $200,000 a year, while a franchisee who invested $100,000 to open a service-based business would be thrilled.

To be competitive in today’s franchise marketplace, the franchisee needs to achieve an ROI of at least 15 percent by the second to third year of operation. And if the franchisor is targeting area-development or multi-unit operators, it will need to provide a higher return at the unit level to offset the incremental overhead associated with multiple unit management.

It’s important to note that these returns must be calculated after deducting a market-rate salary for the owner-operator franchisee, since the franchisee’s alternative to buying your franchise is to invest his money and get a job. So he’s entitled to a return on both his money and his time.

Adjusted Cash Flow ÷ Total Cost of Investment = ROI

The first thing to determine is what a franchisee will have to invest to obtain a particular franchise. The number should include all the costs incurred in starting an operation from the ground up, including any equipment, build-out, or inventory costs. You’ll also want to include an estimate of any initial franchise fee you’ll charge and any cash flow expenses the new franchisee will incur for initial advertising, personnel recruiting, training expenses, and the initial salaries and rent the franchisee will need to pay prior to achieving break even.

Once you’ve calculated your franchisee’s projected initial investment, you’ll need to make some adjustments to your current income statement to calculate a franchisee’s projected return. If you have multiple units in operation, start by looking at the unit or units you feel are the most representative of franchisee performance. You don’t want to look at a best-case scenario that franchisees aren’t likely to achieve consistently. Likewise, you don’t want to be overly conservative, as this will adversely affect your ultimate fee and royalty structure. The goal is to start with your best estimate of annual franchisee financial performance once a unit is mature, with the caveat that the franchisee will need to make their requisite return by year three or sooner.

You will then need to make some adjustments for franchising. The primary adjustments you should consider are:

Normalize the manager’s salary. If you as an owner-operator are taking a larger salary than you might pay a hired manager (or are paying longtime employees a higher-than-average salary and/or benefits), you would adjust that salary downward. Conversely, if you are not yet taking a salary (or taking a below-market salary), you would adjust it upward.

Adjust expense items. Look at each and every expense line item on your income statement to see if a franchisee’s expenses will vary from yours. For example, if the franchisee will own a single loca­tion, but your income statement shows the cost of a vehicle to move inventory between multiple locations, you should eliminate that line item.

If your franchisee will be buying equipment or goods from you at a markup, you need to increase their anticipated cost of goods sold line. If the franchisee will be paying more (or less) for rent, for example, you would need to take that into account.

Eliminate any expenses a franchisee will not incur. Franchisees will not, for example, have costs associated with a separate administrative office or field support team if you have those expenses allocated in your income statement. They will not incur certain legal expenses, such as trademark work, but you will want to include the expenses of incorporation or any locally required licensing or bonding.

Eliminate any one-time-only or investment expenses that show up as an expense item on your income statement.

Eliminate any financing expenses such as interest. Since you will be con­ducting this analysis on a cash-on-cash basis, it’s assumed that the franchisee will not need to finance anything.

Eliminate any non-cash expenses such as depreciation and amortization. These expenses help reduce taxes but do not alter the franchisee’s cash flow.

Eliminate any allocations for income taxes, as these taxes would need to be paid on any alternative ROI.

Confine expenses added to those pertaining to business operations. Do not include extraneous tax minimization strategies you may have employed for your personal benefit (automobiles, entertainment, insurance above an industry norm, etc.).

Add to your expense line an approximation of royalties, contributions to a system-marketing fund, or other fees you will assess your franchisees.

Once you’ve made these adjustments, you’ll have an approximation of your franchisee’s adjusted return that can be used in the numerator when calculating ROI. With revenue and investment figured, you can now calculate the projected ROI.

In the vast majority of cases, if your business doesn’t meet these return criteria, don’t franchise. Period.

Written by Mark Siebert of  iFranchise Group. Original article from Entrepreneur.

When a restaurant or retail tenant is also a franchisee, there are specific challenges in negotiating the lease. The tenant / franchisee needs to carefully review and negotiate the lease agreement to ensure that its lease meets all of the franchisor’s requirements, and that its lease obligations do not conflict with its franchise obligations. The landlord may need to make certain concessions for a franchisee tenant, while protecting itself from the credit risk inherent in a small-business tenant. The franchisor needs to protect its interests in the physical location of the franchise business, even though it is not a party to the lease.

The Letter of Intent

The Letter of Intent is where the landlord and prospective tenant hash out the basic business terms before investing the time and effort of preparing and negotiating a full lease.

Even if the franchisor has no involvement in the LOI stage, the landlord and the franchisee / prospective tenant should proactively seek to understand the franchisor’s minimum requirements for its lease approval as well as any potential conflicts between the lease and the franchise agreement.

If a franchise agreement contains specific requirements for the franchisee’s lease (whether those are provisions to be included in the lease, a lease rider, or both), it is best to bring these up when the LOI is being finalized.

The Franchisor’s Lease Rider

A Franchise Disclosure Document often includes a form that a franchisee is supposed to have executed by a landlord as a condition to the franchisor’s approval of a lease. The document goes by various titles, such as “Lease Rider,” “Collateral Assignment of Lease and Agreement of Lessor” or “Lease Addendum.”

The Lease Rider will cover various issues important to the franchisor. One of the most common provisions is to require the landlord to send the franchisor copies of any lease default notices, and to give the franchisor a window to cure any default by the tenant.

A second common provision is a right of the franchisor to assume the lease as a “pre-approved” assignee. The franchisor will also want the right to further assign the lease to a new franchisee, or to have the lease assigned directly by one franchisee to another. The landlord may be willing to agree to this, but will often insist that the assignee cure any defaults and that the assignee meet financial and other qualifications.

Important Issues In The Franchisor / Landlord / Franchisee-Tenant Triangle

(1) Length of Term. When does the lease expire, and when does the franchise agreement expire? If they expire on different dates, there is obviously a potential problem. A franchise agreement typically runs for a specific number of years from the date of execution. Sometimes a franchise agreement will run for a term of years from the date the franchisee opens for business.

Unless the tenant insists on getting the same expiration dates, the term of the lease will almost always end on a different date than the franchise agreement. In a retail lease, the expiration date might not even be known when the lease is executed. For example, a 10-year lease term may expire on the “120th full calendar month following the earliest to occur of (i) 120 days after the Tenant obtains all construction permits, (ii) 180 days after the date of this Lease, or (iii) when Tenant opens for business.”

The unwary franchisee / tenant may run into a gap where its franchise term has expired but it’s still obligated on the lease. “Going dark” before the end of the lease term is often a default under the lease, and not a good outcome for the tenant or the landlord.

Conversely, the franchise / tenant may face a gap where its lease has expired but the franchise term is still in effect. In that case, the franchise / tenant may face significant liability under the franchise agreement, and the franchisor will unexpectedly lose a unit.

The franchisee / tenant may avoid this by specifically negotiating for a lease term (or option) that expires on the same date as the franchise agreement. If the landlord refuses to agree, the franchisee / tenant may be able to go back to the franchisor and negotiate a change to the franchise term.

(2) Permitted Use. The “Permitted Use” clause limits the business that the tenant may operate in the retail space. Generally, the tenant wants maximum flexibility, while the landlord wants to specify the trade name as well as limit what sort of business is conducted under that trade name. At a minimum, the landlord will require that the Permitted Use not conflict with any existing “exclusive rights” granted to other tenants in the shopping center; the landlord may also want the ability to bind the tenant to exclusive rights that landlord may in the future grant to other tenants.

The franchisor and landlord will be in agreement on the trade name – they want the tenant to operate only the franchisor’s brand. However, a conflict may arise over any limits on the business conducted. A franchise agreement will typically require the franchisee to offer the franchisor’s entire menu or product offering. If the lease prohibits the franchisee from complying with changes to the menu or product offerings, the franchisee will have to breach one of its agreements.

(3) Construction; Signage and Decor. A franchise agreement will require the franchisee to construct its premises according to the brand’s requirements, including layout, equipment, signage and décor. The franchisor will typically have approval rights over all aspects of franchisee’s construction.

The landlord will usually have approval rights over the tenant’s construction and signage as well. To the extent possible, the franchisee / tenant should seek to have its construction and signage plans pre-approved by the landlord prior to lease execution.

If the shopping center (or the local jurisdiction) has limits on color schemes, construction materials, signage or other aspects of the business, the franchisee will need approval from the franchisor to deviate from its standard brand requirements.

(4) Future Remodeling Obligations. Under a typical franchise agreement, the franchisor can require the franchisee to remodel their business to the franchisor’s then-current “brand image” for new franchisees. There may be some limits on this right (such as remodels not being required more than once every five years). In the lease, the franchisee / tenant should seek to have the right to remodel the premises consistent with the franchise agreement.

(5) Assignment Clauses. As discussed above, one of the franchisor’s primary goals is to ensure the franchised location stays open under the franchisor’s brand, regardless of who is the franchisee. The franchisee / tenant will want the ability to sell their business to a new franchisee. The landlord, however, will, at a minimum, want any future owner to meet the landlord’s financial and other requirements for tenants. The franchisee / tenant will want to be released from all liability upon an assignment of the lease. The landlord, of course, prefers to keep the original tenant liable, while the franchisor is generally indifferent on this point.


Negotiating a lease is often a difficult, contentious process between the landlord and prospective tenant. When the prospective tenant is also a franchisee, the process can be even more complicated. The franchisor, the franchisee / tenant, and the landlord all benefit from understanding the perspectives of the other parties and the issues that arise among the three different parties. By addressing franchise-specific issues early in the process, the tenant and landlord can more easily move the deal to closure.

Article from the Shipe Dosik Law, LLC Franchise Law Blog – July 9, 2015.

At The Retail Strategy, we work with many franchise concepts and have seen many of our clients do exceptionally well. In fact, it’s quite common for franchisees to expand their portfolio across multiple brands once they get established. It’s extremely important to all of us at TRS to find the right location for a brand and see our franchisees become successful.

Why do some franchise outlets thrive while others end up with a ‘closed for business’ sign in the window? Sometimes the franchise concept or location determines success, but a lot of it has to do with you, the franchisee.

Making smart choices every step of the way—and avoiding certain pitfalls—can make a big difference to your bottom line and your franchise’s viability. Read on to find out 10 ways to improve your odds for franchise success.

1. Choose The Right Business For You 

Franchisees whose skills are a good match for the business tend to do better than those who are not in their element—but how do you know if the concept you’re buying is right for you? It’s really quite simple: ask yourself what you like to do. For example, if you love kids, find a franchise that allows you to work with them. If you have a passion for technology, seek out a computer-related franchise concept. However, don’t just think about the product or service, but what your actual daily tasks will be. You may love to cook, but owning a restaurant will be about more than just food. In fact, your primary tasks will involve managing, hiring, training and firing staff.

In addition, make sure your skill set matches what the franchise will require of you. Do you like building long-term relationships with customers? If so, a postal franchise might be right for you because customers come back regularly. However, if too much routine bores you silly, a postal unit would be your worst nightmare.

2. Improve Your Business Skills

While franchisors will teach you their system to help you build a successful outlet, most also expect you to bring some basic business skills to the table. If you don’t know accounting basics, how to read and work with financial documents or how to hire and fire employees, you’re going to encounter trouble.

If your sales skills are rusty, your knowledge of business taxation is a bit shaky or you’re not up to date on Internet marketing, consider taking a class to improve your skills. Continue to upgrade your knowledge annually. These classes are often available at a local school; there are even one-day seminars and webinars (Internet-based seminars) that take less time and monetary investment. 

3. Follow The System

 Part of the reason you choose a particular franchise is because it has a successful system. In order to be successful, you have to learn that system. Don’t just ‘get by’ during your initial training; absorb everything they can teach you. Continue to read the manuals and work with other franchisees up to and after your opening day. Don’t listen when franchisees try to tell you they have a better way than the franchisor’s—you are purchasing a tried-and-true system, and you owe it to yourself to follow every element of that system until you understand it completely.

If you implement changes on your own, particularly in the early days, you could put your franchise at risk or run into unforeseen consequences that the franchisor already has anticipated. Don’t try to be a rebel – only make changes after speaking about your concerns at length with your field representative. By taking this approach, you can avoid making a rash error (and possibly save your franchise).

4. Have A Business Plan

While the thought of putting together a business plan might be intimidating to a franchising novice, it doesn’t have to be. It can be as simple as setting some goals and doing a financial projection for the next year or detailed enough to take to the bank for cash. When in doubt, ask you franchisor or fellow franchisees for advice on how to proceed.

5. Play Well With Others

A colleague named John opened a quick-service restaurant (QSR) franchise when the company was relatively new to franchising (it was a recognized brand, but had previously relied on corporate-store expansion). As such, there were some glitches in the franchisor’s dealing with new franchisees versus corporate unit managers. Some franchisees started playing political games—they formed groups, talked incessantly, complained about the marketing, objected to the rules and generally whined—but John kept out of it.

 When the company’s field rep walked in, John treated him with respect. He listened carefully, asked questions and maintained a positive attitude. When a new policy came out from corporate, he implemented it without complaint. He refrained from gossip and spent time with like-minded franchisees, discussing what a great opportunity they had in this business. In return, the franchisor treated him with respect. Guess who got first choice when a unit became available?

Corporate employees are dedicated people who are doing everything they can to make franchisees successful, but first and foremost, they are people. Your efforts to respect and listen to them will pay dividends for you. (The end of the story: When John sold his multiple units, he banked a huge profit!)

6. Take Control

 Part of the appeal of a franchise system is the support a franchisor can provide. However, the ultimate success or failure of your franchise is largely your responsibility. Yes, your franchisor is going to train you on its system and give you the tools to build a business—but you will be on your own to run the day-to-day operations of your outlet. You can call the franchisor with questions, but the decisions will ultimately be yours. Embrace and enjoy this freedom—it’s part of the appeal of entrepreneurship.

7. Never Stop Marketing

As a franchisee, your job, first and foremost, is the sales and marketing of your product or service. Don’t wait for your franchisor to remind you—get your marketing out there all the time, analyze the effectiveness of each method and share effective techniques with your fellow franchisees. If you’re busy working on your computer or handling other administrative tasks over marketing initiatives, you are limiting your success.

8. If You Can’t Sell, Hire Someone Who Can

Simply put, some people just hate to sell. They just aren’t comfortable picking up the phone or working a room. However, sales are an inevitable part of almost any franchised business. If you don’t feel comfortable handling this task, you need to find someone who will.

Ask for help from your franchisor and fellow franchisees who have effective salespeople on staff. Instead of hiring someone just like yourself because you like them so much, recognize that as a business owner, you’re going to need to leave your comfort zone and hire someone with a different personality and skill set. A highly successful friend of mine puts it this way: “Hire people smarter than you—that’s the key to forming a great team.”

9. Avoid Credit Cards

The incredibly high rates on this expensive form of credit can slowly eat away your profits and cause you stress. Real financing at a reasonable rate is hard to get, but not impossible—unless you wait too long and you’re in financial trouble. Make sure you have plenty of cash before you launch your business, and seek financing immediately if you see a downturn in your future.

10. Learn Your industry

Once your franchise is up and running, learn as much you can about your new industry (in addition to what you learned during your franchise research). Almost every sector has associations and meetings where business owners gather and share ideas. Trade associations and local boards of trade bring together new and established businesspeople, providing a great forum for learning and networking. Your fellow franchisees can also offer great insight into your industry; don’t ignore this valuable network.

Tips written by Cheri Carroll, FranDevelop Consulting

The franchise model in the U.S. is thriving, and some of the biggest success stories are coming from smaller ideas. While much of the growth still revolves around big brands that mark many of our street corners and strip malls—think Dunkin Donuts, McDonald’s and Subway—sectors across a wide swath of industries are blooming as the economy continues its slow rebound, creating opportunity for a new generation of million-dollar-plus businesses generated from little-known franchise concepts. Continue reading

After spending more than 12 years in the healthcare industry in Massapequa, New York, Laura Maier noticed a problem with her town: There was no Dairy Queen. With memories of family get-togethers at local ice cream shops in mind and a nostalgic desire to provide that atmosphere to locals, the New Jersey native set out to change that.

Maier’s dream of creating a community hub despite her lack of industry experience became a reality last June when she opened the area’s first Dairy Queen unit. She operates a Dairy Queen Grill & Chill, which serves hot food items like burgers, chicken sandwiches, wraps, hot dogs, and side dishes in addition to traditional ice cream products. Maier attributes much of her success to continual involvement in the community she sought to serve. Maier discusses how franchisees can achieve long-term success by staying relevant within the community and leveraging the unique qualities of their product.

1. Remember That Customers Are The Source

When we first opened, we had customers lined up outside the store to stay overnight to be our first patrons. From our first day of business, I knew if I didn’t pay attention and stay committed to my customers, I would not have a successful business. Every day of the week, in any capacity, I make it a point to be in the store and to communicate with the customers. They drive my business, but they also have so much to say about the needs in their community. I am doing myself a disservice if I don’t actively listen to them. You cannot simply open up a business and then walk away. I have a fantastic team, and Dairy Queen has been a tremendous help in every aspect of the business. But if I don’t stay connected with my customers and hear what they have to say, my business is not going to work.

2. Hit The Ground Running

I was fortunate to have a brand that was new to the area. Because of this, we did not have to do much advertising in the first few months, and we had enough foot traffic to sustain good business. Nonetheless, I knew I should not let time get away from me with regards to getting involved within the community. Not long after opening, I joined the local chamber of commerce, which was extremely helpful. I became involved in many activities and meetings, and I would highly recommend it to any franchisee. This is the local community, full of business owners just like you. Aside from what my team told me about operating the business, I had very little experience with trying to start one from the ground up and grow beyond the four walls. The involvement with our chamber of commerce was a big help, and it seemed after that first step, opportunities became more apparent to me as a business owner.

3. Consult With Others

I am a very open person. Moreover, I don’t like saying “no” to any opportunity that has the potential to grow my business. However, having little exposure to how the industry operates, I constantly am asking questions to other business owners, other franchisees, and, if applicable, other participants who have worked similar fundraising events, sponsorships, etc. Some of our sponsorships and fundraisers we ended up scheduling later in the year because of the advice I got from other participants. Community involvement can be daunting because of all the options out there. It’s hard to know what to choose and what will work. Going to others for advice is always a good tactic—never be afraid to ask too many questions.

4. Capitalize On Local Events

For most community-based events or fundraising opportunities, there is a relatively low cost for a business. It doesn’t take much work to talk to your local businesses, schools, and other establishments. Don’t be afraid to rely on your past work experience, either. We were fortunate enough last year to be a part of Miracle Treat Day, Dairy Queen’s fundraiser for Children’s Miracle Network (CMN) Hospitals, where $1 or more is donated to the local hospital for each Blizzard sold. I happened to work at CMN Hospitals prior to my franchising career, and I knew participation in this event would be crucial to my community exposure. Our location was lucky enough to have Miss America stop in on her media tour to help promote that nationwide event, and we raised $3,000, plus an additional $2,500 in private donations, for the local hospital in one day. Being able to give back to the community in such a manner was truly gratifying. Additionally, the cost to promote such efforts is minimal. Social media, specifically Facebook, has been the direct line to my efforts. Simply posting a flier on the company page merits a ton of feedback directly from customers and, in turn, creates word-of-mouth exposure I could not generate on my own.

5. Leverage Your Employees & Customers

By keeping your ear to the ground in and outside of your business, opportunities will come. For instance, one of my employees is an Eagle Scout and needed to renovate part of a local church. We did a fundraiser to help him raise the money for the renovations, and in one night raised the necessary funds. Because of this, we are looking to partner with the local Eagle Scout Chapter this year for more fundraising opportunities. These and other chances for community involvement can be closer than you think; they could even be within the unit itself. However, I cannot stress enough the level of importance a customer base has when it comes to community involvement. I plan to open up another unit within the year, and I have customers giving me advice on the community, the real estate, where to go, and more. They are on my side, and that is a great experience to have as an owner. Without the involvement, I would not have this blessing. Additionally, if you are in an unfamiliar area—as I will be when the new unit opens up—do not hesitate to talk with other local businesses to see how they got involved. I will do as much as I can to try and get the same community exposure, but having little knowledge about the new area, it’s vital to rely on advice from others.

Article from QSR Magazine

Whether you are a business investor considering a franchise opportunity, a franchisor seeking qualified franchisees, or if you partner with franchise brands, it is important to know why franchising is such a great investment.

Top 3 Reasons To Invest In Franchises:

1. Franchises tend to be about two and a half times more likely to succeed when compared to new businesses that have no franchise affiliations. In fact, it has been found that 97% of franchises that opened in the last 5 years are still open today. In comparison, the likelihood of a start-up business still being open in 5 years is only 47%.

2. From business plans to site selection requirements,franchisees are provided with models that are proven to be successful. Not only that, but they get a brand name that already has an established identity. Franchisees are able to save both money and time by not having to start from scratch.

3. Operating costs are oftentimes more favorable for franchised concepts. Products and services necessary to run a business are often heavily discounted for franchises as the franchisor has the ability to provide them to their entire portfolio of franchisees at a bulk discount.