Wednesday, December 2, 2009

Should Your Startup Be a Franchise?

By Donald Cranford, Franchise Direct

Starting or buying a business is one of the two or three biggest decisions you will make in your life. The investment and risks involved are great, and have increased with the economic challenges of the last few years. One of the ways to reduce the risk is to buy a pre-defined concept, rather than invent and implement your own. This is the franchising approach.

Franchising offers a kind of compromised independence where the costs of partnering with a popular business include fees to franchisor and less direct say in how the business is run. From McDonald’s to the local cleaning company, franchising has spread across the world because it allows business owners to invest in a proven concept and brand.

At Franchise Direct, one question we get asked all the time is ‘What makes a successful franchisee?’ It’s a question of nature versus nurture: is the ability for franchise success a temperament you are born with or is it something that can be learned on the job?

In our experience and research, there are no fixed laws about who can or cannot succeed with a franchise, BUT there are a few strands of what I call Franchise DNA. I’d like to discuss two in particular. If a franchisee possesses both, all the better.
  1. The Innovator. Franchisees are the public face of a franchise, the weather vane, the person who knows which way the wind is blowing. Franchisors may be regaled by daily market research power point sessions in their oversized offices, but in truth the only person who will really know how your business is faring is you.

    A franchisee who can pool all of the accumulated knowledge of dealing with customers on a day in, day out basis and turn it into special offers or deals is someone who will survive in franchising. Look at the ramifications of Subway franchisee Stuart Frankel’s decision to implement the $5 dollar foot-long at his store in Florida. The whole country knows about it now. An innovative franchisee takes the reins of his or her business and truly adapts it to their area.

  2. The Conformist. This might seem to contrast with The Innovator, but in reality they are simply like Yin and Yang. Franchising in a way is like a marriage: you are signing a social contract and must abide many laws. A maverick streak will always come in handy when running a business, but in reality, if you’re bad at taking orders and abiding by someone else’s vision for the presentation of the business, you’re going to find franchising a very frustrating experience.
Going back to the previously mentioned ‘market research power point’ sessions, franchisors have expended an enormous amount of time and money on considering how a franchise will look and exist. You need to be able to take commands from on high and cater the business to someone else’s vision. American business people pride themselves on their pioneering, frontier spirit, but in reality, a small touch of submissiveness has led the way for the success of franchising, which has helped shape the American marketplace over the past half century.

F Scott Fitzgerald wrote that a true artist is someone who can keep two contradictory thoughts in his mind at one time. In a certain way, it’s the same with the truly successful franchisee. You’ll need that ruthlessly independent streak, but you’ll have to match it with a respect for someone else’s business vision. If you can do that, a franchise could be right for you.

Franchise Direct is one of the world’s leading portals for franchise and business opportunities. Started as a single website for the promotion of franchises in the US market in 1998, Franchise Direct now operates a suite of six multilingual sites targeting North America and Europe. You can reach Donald directly at donald@franchisedirect.com.


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2 comments:

  1. It's funny, franshises are a great oppritunity to copy an existing winning formula. The onyl problem is that typically a franchise costs a lot to get into. It's basically for people who already have money and don[t want to start a company and deal with the ground work it takes to set up a successful shop or resurant etc etc. If you're like me you want to change everything and make it your own hehe. But at the same time I like following a winning formula and following in the footsteps of success.

    Cheers
    Clinton

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  2. If a person has a great business, then franchising wont work. First business can be successful, especially internet business

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