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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

Most Franchises Struggle to Grow, but Then There’s the 20%

We routinely write about young franchise concepts because everybody likes to know what’s new in franchising, but a study released recently by Franchise Grade shows how long the odds are for those so-called emerging brands.

Just over 30 percent of brands that started four years ago had one or fewer locations, the study said, while 52 percent that started 10 years ago had 50 or fewer franchise locations, according to Ed Teixeira, COO for Franchise Grade, the market research company for franchising in Long Island.

But of course that leaves 20 percent, the percentage of franchises that started from six to 10 years ago and reached or surpassed 100 locations—in other words, the amount that causes prospective franchisees and emerging franchisors to keep on trying.

Emerging franchise systems are defined as having 100 franchised outlets or fewer and account for 71 percent of franchise systems in the United States. Fifty-seven percent of all franchise systems in the United States have 50 or fewer locations, the study says.

“We did it for a couple of reasons, not the least there’s been so much attention lately on emerging franchises,” said Teixeira, about why Franchise Grade did the study. He cited the Springboard event in Philadelphia in September that drew hundreds of emerging franchises, and the International Franchise Association’s offerings for young brands. “Last year the IFA had a workshop for emerging franchises,” after its annual convention, and it drew a standing-room only crowd. In early November the IFA is hosting an Emerging Franchisors Conference in Phoenix.

He said the stats aren’t depressing, as I had opined, “but rather just to show what the situation’s like.” Twenty percent are doing great, the study shows. “Unfortunately there are some others that either should not have franchised, or maybe should have waited until they had more units up and operating or more working capital,” he said.

“The whole idea of this is not only to shine a light on what these startups and emerging franchises look like, but what’s needed to get them off the mark, so to speak,” Teixeira said. “It’s always grow, grow, grow, which is important, but maybe there should be more focus on having a sound system in the first place.”

Franchise Grade has 2,500 FDDs or franchise disclosure documents in its database, and based its study on those franchises it could identify as start-ups. Part two of the study, expected to be completed in about a month, will drill down into industry sectors and compare systems’ growth patterns.

Original article by Beth Ewen

Published 10.24.17 on FranchiseTimes.com

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.

Franchise Businesses Expected to Grow Faster Than the Economy This Year

Eighty percent of franchisors, 64 percent of franchisees, and 76 percent of suppliers expect their business to do better in the next 12 months. This is according to the Franchise Business Economic Outlook Report released by the International Franchise Association.

Franchise Business Economic Outlook for 2017

Prepared by IHS Markit Economics for the International Franchise Association’s Franchise Education and Research Foundation, the report goes on to say franchise businesses are expected to grow faster than the economy in 2017.

Why the Positive Outlook?

In assessing the indicators driving the positive outlook for franchises, IHS highlighted several points. It is basing the growth on solid gains in consumer spending, residential investment, business fixed investment and exports.

Consumer spending, which franchises rely on, is projected to increase by 2.6 to 2.7 percent annual rates during the final two quarters of 2017. This is based on increases in household finances with gains in employment, real incomes, stock prices and home values.

The public sector is also going to play a role with the release of federal funds for surface transportation projects as well as defense and security. 


The biggest concerns for franchisees are joint employer, tax reform, minimum wage, and health care costs.

A joint employer ruling was enacted during the Obama administration, and the ruling was particularly burdensome for small businesses. But the Labor Department rescinded the ruling under the Trump administration, and the Save Local Business Act is gaining traction with bipartisan support.

Robert Cresanti, International Franchise Association President and CEO, is positive about the Trump administration as it applies to businesses. Cresanti said in a release, “We’ve seen positive steps toward a more business friendly environment, such as rolling back unnecessary regulations, but there is still much work to be done. With a burdensome tax code and a confusing joint employer standard, franchise businesses are still competing with one arm tied behind our back.” 

Additional Data Points from the Report

The number of franchises is set to increase to 745,000 in 2017, an increase of 1.6 percent or close to 12,000 new establishments. This of course will increase the employment rate, growing the sector by 3.1 percent, which is much better than the 1.7 percent of total private nonfarm employment.

In terms of monetary output, franchises will generate $711 billion in nominal dollars, an increase of 5.3 percent in 2017.

Franchise businesses across 10 broad business lines were surveyed. Commercial and Residential Services is expected to grow at 3.0 percent, while personal businesses will experience even higher at 6.1 percent.

Franchise growth also varies according to region, but the top five States in the survey were, Utah, Florida, South Carolina, Washington, and Wisconsin with growth of 7.6, 7.0, 7.0, 6.7, and 6.5 percent respectively.

Original article from Small Business Trends

September 17, 2017 by Michael Guta

Within the last two weeks, I’ve experienced as a prospect serious marketing follow-up failure.

I am acutely aware of marketing follow-up and the lack thereof like a high-end chef is to dining in a fine restaurant as the guest; we can be harsh critics of other people’s work because we live by high standards ourselves.

Guess what the most important element of all sales and marketing campaigns is when it comes to winning and keeping the customers you need and want?


Follow-up marketing and sales activities are the primary key to success, especially for small businesses that take a lot of risk with marketing.

But follow-up generally doesn’t happen. Here are five examples of common and costly follow-up failures I’ve seen within the last week. Believe me when I tell you this is widespread.

Multiple salespeople who call my office never follow up. Ever. I am no longer a prospect.

A local networking organization never sent a follow-up after I attended their first event. Not even one email with “Thanks for joining us.” I am no longer a prospect.

A financial services company for whom I was a major prospect never followed up after the first meeting. No phone call, email or personal note. I am no longer a prospect.

A phenomenal non-profit I did some volunteer work with went dark on me during a small, internal marketing initiative. This project could have been a home run. I am no longer a volunteer.

A non-profit I approached to give money and time to for the first time never followed up. It was if they were simply too busy. I no longer donate.

Do you see the pattern? Stop and think for a moment now about your own marketing and sales follow-up in your company or organization. If you’re not following up as much as you could be, think about the potential for new business that might lie in the 94 percent of the people on your email list who haven’t bought anything yet.

There are several obvious places in marketing and sales campaigns where we see failure to follow up. Marketing follow-up failure happens all of the time especially after the first three attempts to contact, pitch or engage with a qualified prospect.

I audit thousands of marketing campaigns and rarely see more than three “touches” or ways of following up with prospects. The truth is most of these campaigns need at least eight, 12 or 18 follow-up touches to get more prospects to convert.

If chief executive officers, business owners and marketing leaders knew for a fact that 82.4 percent of their best customers convert after the ninth follow-up touch, how much do you think not following up at all costs them? I don’t know the real number, but I’m guessing it’s in the billions.

Consider all the money each year spent on digital marketing alone. The CMO Council reveals in a report that global spending on media in 2014 hit $1.6 trillion.

Think about all the money, time, creative energy, programming, integrating, testing and learning that has to be done in today’s digital, content and marketing automation realm. It’s massive, especially challenging for small businesses lacking resources and working capital to climb and a long, marketing learning curve they can’t afford.

It’s fair to include sales follow-up failure in this conversation. In my small business realm of marketing training, coaching and consulting the primary purpose of marketing is to drive sales.

Branding is a bonus; not that we can ignore the fundamentals of sound branding. We focus instead on lead generation and conversions to sale. That’s what counts the most. Sales and marketing must align and flow.

Here’s how to avoid blowing it on follow-up so you can see better conversion results with your sales and marketing campaigns.

  1. Take a holistic approach

Begin with the end (sales) in mind. Set sales goals. Build integrated, end-to-end marketing campaigns that peg to a sales result you can measure. Your email, follow-up calls and direct mail campaigns must last much longer in duration including months, not just weeks.

  1. Go long

Extend the duration of all your campaigns starting with the first and most important campaign for new business. Instead of three emails, map out 12.

  1. Track the return on investment of all your marketing investments

This includes tracking lost business. Use software such as SharpSpring or the marketing automation and sales enablement platform that fits you and your team best. There are several affordable, scalable e-mail marketing, full-automation and sales enablement platforms. This enables you to see how and where your marketing campaigns are working and are not working.

  1. Work a manageable plan of action

Keep it focused and simple. Don’t take on too much at once. Your plan can help your team be more accountable to the follow up elements, deadlines, budgets and outcomes. Your action plan must tie directly to your business and sales goals. Keep your team focused and aligned.

  1. Create better converting offers

Never stop creating better content. Once you’re in the habit of measuring and testing your marketing campaigns, you can see the best and worst converting results. Rotate the budget for lowest- performing campaigns into the creative elements you need to beat the best converting result. This way you’re always raising the bar against your best-converting result even if you’re only testing one variable such as a headline or web form field.

Marketing and sales follow-up failure is costly. Once you know how much follow-up failure could be costing you and your team you will hopefully be more motivated to attack and fix the problem. Go for it. Start on your low-hanging fruit.

Believe me, the problem is seldom the software. It’s the people who make marketing, sales, team and tech decisions who have the burden of making sure follow-up failure is fixed. It’s a massive opportunity to convert more of what you have now instead of blowing more money at the top of the funnel and wondering why you’re not happy with marketing results.

Start with the right mindset. Get disciplined and commit to following up better. Invest in the right marketing platform so you can easily measure your results and organize your sales and marketing to a highly-aligned, focused plan of action. Commit to finding out exactly what happens when you learn to fix your marketing follow up failures.

By Clifford Jones

Original article from the Austin Business Journal on 07/26/2016 

Owning your own business, whether you employ just yourself or a handful of employees, is no joke. It is an all-encompassing never-ending job that takes dedication, perseverance and a lot of passion. Yet, the rewards for seeing your dream come to life are undeniable, which is why the AIGA put together a panel discussion comprised of freelancers and small business owners to provide insight to how others navigate ongoing demands, build their operations, structure their time, collaborate with partners, write up contracts and overall enable their business to thrive. 

In general, the consensus is that time is a limited resource – one that you must structure in a way that best fits your lifestyle – but one that should be used wisely. Surround yourself with people who will push you to be a better version of yourself in addition to helping drive your business goals. Focus on your customers needs and make sure you are protected. The law has not yet figured out what the internet is, so be very careful when drafting proposals / contracts. Once the “minds have met” so to speak, you basically have a signed contract which is why you must outline in detail all manners of self-coverage.

A good practice is to always keep documentation of all conversations – a few tools the speakers recommended are: Wunderlist, Producteev, Streak and Trello. Last, but not least, Marketing – the ever-elusive ability to woo potential customers into being actual clients. A few suggestions for getting your name in the industry, especially when starting out: share your business – post not only on your website but on any social media, blog or industry websites that will help bring visibility to your company; list your business in all industry-relevant directories (both physically and online); try to get as much press as you can – oftentimes if you reach out to industry publications and ask for a blurb to be included they will comply; and finally, sending care packages to potential clients is never a bad idea (after all, who doesn’t love to receive a gift made specifically for them?).

With Halloween having just passed, Black Friday, Small Business Saturday and Cyber Monday aren’t far behind. For small retailers, that means it’s time to gear up for your holiday marketing moves. Like last year’s, this is a short holiday shopping season (just 26 days between Black Friday and Christmas, compared to the more typical 31), so you’ll want to make the most of it. Here are some steps you can take to make your shop stand out from the crowd.

Plan Ahead

Planning ahead will give you an edge, enable you to budget better and ensure you don’t miss important dates. This year:

  • Thanksgiving falls on November 27

  • Black Friday on November 28

  • Small Business Saturday on November 29

  • Cyber Monday on December 1.

Create a marketing calendar working back from these and other key dates, breaking down the actions you’ll need to take to meet deadlines. For instance, if you want to send a direct mail piece to arrive before Thanksgiving, when do you need to design and submit the ad?

Use Holiday Cards to Put Your Business Top-of-Mind

Send early holiday cards (such as a Thanksgiving card) to give thanks for your loyal customers’ support all year long. Better yet, invite them to a special event or sale, and sweeten the pot with a discount or free gift offer.

Help Shoppers Out

Prepare to provide great customer service with little touches like free gift wrap or a gift-wrapping station, a personal shopper to help customers select gifts, or displays with pre-wrapped gifts for certain recipients such as “teacher gifts,” “gifts for Mom” or “baby gifts.”

Hold Events at Your Store

Choose an event that’s festive for the season, but also relates to your store, such as an author signing or reading at a bookstore, a musical performance of holiday songs at a CD store or a cookie-decorating demonstration at a gourmet food store. Events attract crowds and spur spending.

Sell Gift Cards or Use Them as Promotional Items

In 2013, gift cards were the number-one gift shoppers planned to buy, according to a Nielsen survey. Vantiv and eCard Systems are two companies that offer gift cards for small retailers; you can also see if your bank offers gift card options. Gift cards aren’t only for gifts; consider doing a “give one, get one” promotion where customers buy a $100 gift card or $100 worth of merchandise and get a $25 gift card for themselves.

Appeal to Shoppers’ Selfish Sides

With many Americans still watching their wallets, lots of shoppers wait for holiday sales to treat themselves to things they want or need. Window signage or ads promoting two-for-one; buy one, get one half off; or outright encouraging customers to treat themselves are very effective during the holidays.

Show Some Sense (The Five Senses, That Is)

Engage customers’ senses with colorful decorations, festive holiday music, seasonal scents like pine or cinnamon, and refreshments to keep shoppers from dropping. Music or scents that waft outside your store can attract foot traffic.

Buddy Up

Turn your business neighbors into marketing partners by creating promotions, contests and special events together. For example, hold a “12 Days of Christmas” giveaway where 12 retailers in your shopping center each give away a prize a day for 12 days. (Be sure to check into what your local business association is planning, too.)

Take Part in Small Business Saturday

Last year, 71 percent of U.S. consumers said they were aware of Small Business Saturday, and nearly half (46 percent) actively supported it by shopping at a local small business. The result: $5.7 billion in sales. Visit the website to get marketing tools, collateral and ideas for making the most of Small Business Saturday.

 Article from Small Business Trends


On Numbers identified the best markets for small businesses within the nation’s four regions. The were the winners:

  • East (21 markets): Pittsburgh

  • South (37 markets): Austin

  • Midwest (19 markets): Minneapolis-St. Paul

  • West (23 markets): Salt Lake City

Now it’s time to combine the four lists and declare an overall champion. The U.S. market that provides the best opportunities for small businesses to grow and prosper is Austin, which also finished first in On Numbers’ rankings for 2011 and 2010.

Austin is known for its small business drive. The Austin City Council recently approved a resolution to allow the city to work with the Austin Independent Business Alliance on some of the goals outlined in the independent business alliance’s Local Business Manifesto. Another three markets from the South — Raleigh, Oklahoma City and Houston — occupy the runner-up slots in this year’s national rankings. Salt Lake City rounds out the top five.

On Numbers has fashioned a six-part formula to analyze small-business climates across the country. (A small business is defined as any private-sector employer with fewer than 100 workers.) The formula’s components include five-year population growth, five- and one-year private-sector employment growth, concentration of small businesses per 1,000 residents, one-year change in that concentration, and one-year growth in the number of small businesses. Austin’s number of small businesses increased 0.4 percent from 39,180 in 2008 to 39,350 in 2009, the latest year for which official figures are available from the U.S. Census Bureau. That was the biggest gain by any market.

Ninety-seven of the 100 metros actually suffered losses. Austin also ranks second in population growth (18.1 percent in five years) and private-sector job growth (6.3 percent in five years). Raleigh and McAllen-Edinburg, Texas, lead those respective categories. Modesto, Calif., is the nation’s least congenial market for small businesses. Also in the bottom five are Augusta, GA; Riverside-San Bernardino, CA; Lakeland, FL; and Sacramento, CA.