Working with career changers who are thinking about entrepreneurship brings up many concerns, and sometimes full blown fears about business ownership. For some, these challenges present opportunities to learn, grow and test themselves and they relish the challenges. For others, the steps to starting and growing a business can feel too daunting and overthinking the potential problems can be debilitating.
There are many ways to solve these problems, but one option is to consider franchising opportunities. Business franchises offer unique solutions to some of the objections people may have about starting a business. Franchisees are given a model, structure, systems, training and an established brand for starters. There is tremendous value in that if you are so inclined.
I asked franchising expert Jane Stein to answer a few questions I had on this topic and I’m sharing the answers below. While we are all familiar with McDonalds, Jane has some very interesting home-based and unusual franchise options that I didn’t know existed. This could be an alternative way to live a limit free life.
What do you see as the greatest advantage to franchising?
The ability for the first time business owner to step into a proven system, not have to grapple with all of the complications and costs that are incurred in starting your own business. Then the ongoing coaching from a supportive family of not only the franchisor, but the other franchisees as well.
What benefits do franchisees receive that other start-up businesses would struggle with?
Technology (CRM, POS, and other systems used to operate the business) is vetted and provided by the franchise usually as part of your “package”. All the marketing – development and testing, has been previously tweaked and fine-tuned. A good system will know what works and have the collateral. Coaching and operational support – not available in a start-up.
What are the biggest difficulties franchisees face?
Following someone else’s system. Many brands it truly is “their way or the highway”. And a true entrepreneur will struggle in those reins. And of course there are many horror stories of truly bad (incompetent) brands that offer no value or support after you purchase. Due diligence must be done and ideally with the help of a good franchise broker who knows what to look for. Or look out for.
What are some unique businesses that are franchise opportunities that people might not know about?
Crime cleanup, pop up consignment stores, senior care placement services, home and auto modification businesses for disabled and seniors to enhance mobility, craft beer brew pubs, estate sale businesses, adult toy stores (think 50 shades), blow dry bars, luxury pet resorts, gentlemen’s salons, mobile fitness concepts – too many to mention.
What types of investments are required if one wants to purchase a franchise?
A home-based business can be launched with as little as $20,000. But working capital to cover your first year’s living expenses is advised. With a brick and mortar you will need to secure anywhere from $250K to $1MM in funding.
Is a Franchise right for someone with little business know how?
Yes! That’s why one would invest in a franchise!
What does a franchise broker offer someone interested in owning a franchise?
Most good brokers will build a profile on you that will highlight your strengths and weaknesses, transferrable skill sets and even perform assessments to determine the type of business and even the culture of a franchise model that would be a good “fit” for you. They will also have access to all the “cost” information that you won’t find easily on the internet. In addition you’ll access insider knowledge (as to brand reputation), reduce your franchise research time, get preparation for your franchise calls (both with the franchisor and other franchisees, a process called “validation”), and usually other professional resources like funding sources, CPAs and franchise attorneys who may offer you preferential rates. All of this is at no cost to you. You can’t “go direct” and save any money because the franchise fees are non-negotiable. Why not have professional help? The only caveat is that not all brands work with brokers.
Who is a franchise business best suited for?
Anyone who is willing to follow a system and work hard. And you should be someone who values the pioneers who went before you – and don’t mind paying fees for the simplicity of following that proven system. A franchise is not a guarantee of success. Just like any business you should have commitment and passion and, depending on the type of business, the willingness to do business development and networking. In the case of restaurants – I usually recommend you only consider that if you have actually run a restaurant before.
Jane Stein is the founder of Your Franchise is Waiting, a consultancy firm for men and women exploring franchising as an alternative career path. You can reach her at firstname.lastname@example.org or 303-449-1050.