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Franchising as an Alternative Career Option

Franchising as an Alternative Career Option. Dan Johnson The Entrepreneur’s Source Date 4-23-05. Looking for a Change?. Why consider alternatives Options Starting an Independent Business Purchasing an Existing Independent Business Owning a Franchise Questions and Answers. Agenda.

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Franchising as an Alternative Career Option

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  1. Franchising as anAlternative Career Option Dan Johnson The Entrepreneur’s Source Date 4-23-05

  2. Looking for a Change?

  3. Why consider alternatives Options Starting an Independent Business Purchasing an Existing Independent Business Owning a Franchise Questions and Answers Agenda

  4. Ever Considered Business Ownership? 75% of people in the United States have a strong desire to be self-sufficient. They want: • Control of their destiny • Flexibility of their time • Want to be their own boss • More money • Security • Stability • Build something for their family • The American Dream

  5. Ever Considered Business Ownership? • But only 5% of these people make it happen on their own. What’s holding people back? • Can they succeed? • Concern they lack know-how • Financial risks • Don’t know where to begin • Skepticism: Too good to be true • Don’t have support • Unwilling to consider something new • F. E. A. R. (False Evidence Appearing Real)

  6. What Are My Career Options? Self Employment • Starting an independent business • Purchasing existing business • Owning a franchise

  7. To succeed you must have: A marketable product or service A sound business plan An operations plan The know-how to manage, operate, market, and grow a business Capital and expertise Desire to go it alone Ability to take risks Good luck Starting a Business from Scratch But some people thrive in this environment.

  8. Buying an Existing Business - Benefits • An established track record and reputation • Existing customers • Existing cash flow • Goodwill • Lower perceived risk

  9. Buying an Existing Business - Problems But there are things to watch out for: • Finding the right business to buy at the right price • May be more expensive, especially if it is successful • The value of the business may have peaked • May not know the whole story (2 sets of books) • Hard to determine real value • You face the same requirements as for all independent businesses

  10. There are many reasons for failure: Why Do Independent Businesses Fail? • Don’t meet the requirements previously discussed • Fall victim to The E Myth: “Doing what you know, love and enjoy will bring success” but results in: - Being “a technician” - Working “in” the business, not “on” it - Buying yourself a job - Closing up to new possibilities - Gravitating to the comfort of what you know

  11. Why Do Independent Businesses Fail? Definition of Insanity • Doing the same thing over and over again and expecting different results. • Leaving a job only to become self-employed in the same field but expecting a different result.

  12. Most are retail operations, like fast food All the franchisor does is take your money and you get nothing in return You have to know all about running a business first Franchising – Some Misconceptions

  13. Method of Expansion Regulated by the Federal Trade Commission Over 3500 options with 100-200 new each year, with a new Franchisee every 8 minutes 75 different industries Different business models There were more than 750,000 franchise businesses in 2001 Franchising – What’s out there?

  14. Employment by Economic Sector 2001 Information Construction Financial Durable Goods Mfg. Franchise Source U.S Dept of Labor

  15. Gross National ProductDepartment of Commerce

  16. Small businesses create nearly 80% of all new jobs. According to the SBA and the Census Bureau

  17. Characteristics of Franchising Use of trademark, name, etc. Interdependent relationship Franchise fee Royalty payments Advertising fees Typically don’t require experience or expertise in the industry it serves UFOC (Uniform Franchise Offering Circular) Franchising Characteristics

  18. What are you likely to get with the fees? Operating System Training On-going support Software Marketing assistance/materials Equipment Site location assistance Build out assistance Operational growth plans Possibly, even financing Franchising Support

  19. Single unit Owner Operators Semi-Absentee Absentee Multiple units Add additional units over time Commit to several initially, and open within fixed term Area Developer / Master Franchisor Duties typically are to recruit other franchisees, provide training and support Franchising – Different levels

  20. Franchise Costs • Varies widely • Includes • Franchise Fee • Start-up Costs • Working Capital • Consider, too, your own personal expenses

  21. What are Franchisors Looking For? • Franchises are awarded – it’s a two way street • They do not want technicians – they want people who want to be in the business of business • They are looking for skills important to managing, promoting, and marketing a business • They want people who are willing to follow their system

  22. Franchising High Success Rate Why is franchising so successful and so popular? • A proven business system • Training and ongoing support • Being in business for yourself, but not by yourself • Win-win relationship … starts with mutual benefits and grows from there

  23. Finding the Right Franchise • Possibilities Profile • Goals, Needs and Expectations • Transferable Skills • Strengths and Weaknesses • Likes and Dislikes • Communication Style • Behaviors, Values, Attitudes, and Interests • Inside-Out Approach • Financial Considerations • Liquidity • Monthly Income Requirements • Borrowing Capacity • Net Worth

  24. Finding the Right Franchise • No emotions – THIS IS BUSINESS • Do your homework and validate • Speak to franchisors • Speak to franchisees • Study the UFOC • Study the marketplace and the competition • Prepare a business plan • Speak to people who can help you get started: attorney, accountant, insurance specialists, small business consultants, bankers

  25. Be Objective • The key to success is objectivity • Keep an open mind • Make no premature decisions • Know first what you want out of your business

  26. Where Can I Get Help? • International Franchise Association (IFA), 202-628-8000, www.franchise.org • U.S. Government Small Business Association, www.sba.org • American Bar Association’s Forum on Franchising, www.abanet.org.forums. .franchising • IFA’s Supplier Forum publishes a list of firms that specialize in franchising law, www.franchise.org • The E-Myth Revised by Michael Gerber • recommendations from other franchisees

  27. International Franchise Association (IFA), 202-628-8000, www.franchise.org U.S. Government Small Business Association, www.sba.org American Bar Association’s Forum on Franchising, www.abanet.org.forums. .franchising IFA’s Supplier Forum publishes a list of firms that specialize in franchising law, www.franchise.org The E-Myth Revised by Michael Gerber recommendations from other franchisees Where Can I Get Help?

  28. Any Questions? “Things may come to those who wait, but only the things left by those who hustle.” Abraham Lincoln

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