Franchise Opportunities

How Franchises Market Their Brand

Franchise opportunities always come with effective marketing system. In fact, franchises have developed a unique system for marketing the brand. It’s a pyramid structure, with three tiers - national, regional, and local. Smaller or newer systems often have two levels - local and regional, depending on the reach of their franchisees.

Each of these tiers has a different message and function. At the national level, the message is: buy my brand. At the regional brand, the message is more urgent: buy my brand today. And at the local level, the message is even more urgent and specific: buy my brand today from me.

In the best case, these three messages will be consistent and targeted to the right customers. For example, a national TV ad may promote your brand’s new flavoured coffee drink. Its underlying message is: Buy my new drink. At the regional level, a TV ad playing in your local market offers a discount on this new drink for a limited time. (This adds the urgency needed in a regional campaign.) Also at this regional level, franchisees can develop a newspaper insert with a coupon for the drink and the addresses of the franchisees. At the local level, individual franchisees can post the offer on the sign in front of one’s shop and display a poster of the drink behind the cash register. Franchisees can even hire people to distribute coupons or samples anyplace there’s foot traffic, such as the sidewalk, mall, or a special event.

In this way, customers see a consistent message and have an incentive to act on this message. Kurt likens this to a three-legged stool in which each leg supports and reinforces the other. If one goes missing, the entire campaign is in danger of collapsing. Franchisees can opt out at the regional or local levels, but they’d just be working against their best interests.

This system seems to be pretty unique to franchise systems. For example, a chain coffee shop may not offer this type of flexibility to the managers - not owners, as in franchising of their local units. In a national chain, all marketing decisions are made by the corporation, and they must be carried out by their outlets. In franchising, individual franchisees or groups of franchisees can develop marketing techniques that will work in their local market, which is usually defined as the area within three to five miles of the franchise or three to five minutes from it. For example, if you’re in a resort town, you may place spokespeople on the boardwalk, which attracts lots of tourists. If you live in a commuter town, you can post ads in subway stations or trains.

As a conclusion, “There’s nothing else like this system. And when it works, it exceeds anything a corporation can do.”

Posted on May 17, 2008 in Franchises Guide | Leave a Comment

Why Franchise Businesses Fail

Just as there are endless questions to be asked before buying any franchise opportunities and committing to a franchise, there can also be endless reasons why franchises fail. However, there are three major reasons why some go out of business long before they should. This applies to all businesses, not just franchises.

The first factor is a judgment error. This can be anything from having too little capital to stretching resources too thinly to hiring the wrong people. This type of error is sometimes reversible if caught in time, but not always. And after the negative repercussions become apparent, it’s usually too late to do anything about it. As Robert Greenleaf writes in his work on servant leadership, leaders should become more “aware” than others. This means you are constantly doing the environmental scanning necessary to make the right moves at the right time.

A second primary reason for failure is a development that affects the entire industry and dooms it. Today, this often is referred to as “being disintermediated.” This tends to come from technological shifts that make some products or services obsolete. Imagine being in the cassette tape manufacturing business when CDs hit, or in the buggy-whip business when autos arrived. You’d have to change the entire company on a dime or go bust, two options that are less than desirable. The rise and acceptance of the Internet and other technologies have produced countless ripple effects that businesses must contend with to prevent becoming obsolete.

The third primary reason why franchises fail is a lack of integrity and values. A successful franchise has a solid foundation and all of its parts work together. The parts and people are interdependent, not independent or working at cross- purposes. A strong sense of values also runs through the system and affects decisions ranging from how people will be treated to how money will be invested. This integrity ultimately shows up in the individual franchises as a solid product or service, great customer satisfaction, and happy, motivated employees and franchisees.

If these kinds of foundational values been fully understood, you might avoid any failure in your franchise businesses.

Posted on May 16, 2008 in Franchises Guide | Leave a Comment

Your Keys to Success in Franchise Business

Over the years, there are many franchisees and franchisors succeed and realize their dreams. As a matter of fact, they share common features that help them to thrive in franchise opportunities they have taken on. A win-win attitude - They know that what benefits the franchisor benefits the franchisee, and what helps one unit helps the entire system.

Self-knowledge - Success comes from knowing one’s skills, habits, goals, and limitations.

A cohesive team - The franchisor, franchisee, suppliers, business partners, investors, professional advisers, employees, and one’s family and friends work together in a supportive way.

A quality brand - Quality will attract and retain customers and give you a sense of pride in your business.

A growing industry - Growth isn’t based on trendiness, and there’s still some room to increase one’s market.

A suitable workplace - Whatever the location, one’s workplace is organized, inviting, and represents the brand.

A head for business - Knowing how to operate and manage a business will help prevent fraud and waste.

A hunger for knowledge - Franchising eagles make the most of their training and networking opportunities and realize that there’s always more to learn. In fact. learning must become a lifelong quest. Remember: a stream does not rise higher than its source, so fill yourself with knowledge and you’ll lift yourself up.

Social skills - Franchising will challenge your ability to create and maintain working relationships with your franchisor, brother or sister franchisees, customers, and vendors. This is paramount and one of the prerequisite skills you’ll need to succeed.

A nest egg - Those who are successful have enough capital to grow the business and take care of living expenses at home.

Courage and stamina - Opening or taking over a franchise is hard work, especially at the beginning.

Long-term vision - Franchise agreements typically last between 15 and 20 years, so you must be in it for the long haul.

Motivation - You may get into franchising for your own, unique reason, but whatever it is, you should be motivated to succeed.

A dream - We’ve never seen anyone succeed without a dream and the desire to make it come true. Everything begins with a dream.

Look over this list one more time, these ideas can’t be stated often enough. These keys to success will have a big impact on how well you do in franchising, and how well you do in franchising will have a big impact on your life.

Posted on May 15, 2008 in Franchises Guide | Leave a Comment

The Risks of Franchise

Quite simply, franchising diminishes risk. Established brands have credibility with consumers. Nationwide chains have brand awareness and visibility that has sometimes taken years to develop. Established business and operating systems help franchisees hit the ground running. And federal, state, and International Franchise Association (IFA) regulations ensure that franchisors are legitimate and honourable. All of these factors give franchisees a head start over an entrepreneur who wants to start his single-unit independent business.

Still, life in general is risky, and franchising, like everything else, isn’t a completely sure bet. There are always unknowns, and sometimes things don’t work out as well as planned, even by the best business plan. Even with the safety net provided by a sound franchise system, there are risks.

Buying franchise opportunities are a huge purchase. Many franchisees have put up what for them is an enormous amount of money with the hopes that they will have a return on their investment. For some franchisees, the ability to work for themselves is worth it. But for others, especially those who want to make a lot of money quite quickly, they won’t be satisfied by their franchising relationship.

Franchises are also subject to business trends, and these are sometimes unpredictable. You may buy into a franchise system that sells this year’s gotta-have-it widgets, only to find that next year’s widget craze makes yours obsolete. The next fad diet may claim that your confection is entirely off limits, and your customers may flee you. Or a new technology may crop up that leaves your service looking primitive. Despite these changes, you’ll still own the franchise, and without some serious marketing or research and development efforts by your brand, your business may suffer.

Another risk relates to earnings. When investigating your franchisor’s UFOC, you may come across their earnings claim in Item 19. But make no mistake: this statement is no guarantee of earnings. This is merely a report of what other franchisees have earned. It doesn’t say that other franchisees in your area have earned this, or that they did so in their first year of business. It doesn’t say that every franchisee has earned this amount. Just like everything else about purchasing a franchise, this statement requires some investigation. The FTC does not mandate providing an earnings claim, so not all UFOC’s contain this information.

In addition, remember that as a franchisee, you aren’t in business alone. You’re taking a risk by entering into relationships with a franchisor, your employees, and your customers. And anything to do with relationships is always full of risk. We humans are always full of surprises. In business, disputes and disagreements will sometimes come up, and you’ll be forced to solve them. You’ll also need to communicate with your contacts at headquarters, so this relationship is also an unknown. And you’ll most likely need to hire employees, smooth things over with customers, and become a credible leader for your employees and in the community. You’d best be ready for these challenges.

Lastly, remember that in a sense, your friends and family are taking this risk with you. Hopefully, they’re there to support you as you take this great leap. But they may try to talk you out of your plans or put up a fuss when you’re busy with your new enterprise. They may resent that you aren’t contributing to the household income for a time, and they may worry about their own futures, too. If at all possible, you must have the full support of your loved ones as you take on the responsibility of owning a franchise. If not, be single-minded and focused, and don’t let anyone steal your dream.

Posted on May 14, 2008 in Franchises Guide | Leave a Comment

Why Not Start Your Own Franchise?

After taking a look at your own skills, the industries and franchise opportunities that interest you, you may be bursting with ideas. One of those ideas may be for a new company or product that’s needed, but not yet brought to market. And, what’s more, you think that it would make a great franchised business. Instead of becoming a franchisee, and working in someone else’s system and pitching their product or service, you’d like someone to do that for you. You want to be the franchisor, not the franchisee.

Great. But you’ll need to start small, develop your business, and then think about franchising. It won’t happen quickly, nor will it happen alone. Also, keep in mind that while franchising is an effective way to grow, not every business concept should turn into a franchise. Focus on your core business, then see if franchising is the best way to expand your business.

To become a franchisor, you must have a solid product or service. It must be good, original, and fill a need. It can’t merely duplicate another product or service that’s already out there. It should be successful and profitable, so that you don’t leave your prospective franchisees or your customers in the lurch.

Then you must have an original way of delivering this product or service through your own company, for example. And, what’s more, other people should be able to duplicate this method, too. It can’t just be built on your personality or by making things up as you go along. Your business should look and feel distinct, but you should be able to train people to set up shop just like you, too.

Lastly, you should have a product or service that will stand the test of time. After all, you’ll be issuing franchise agreements that will last a number of years-10 to 20, typically and you’ll want demand for your business to be strong at least a decade from now.

These are the bare minimum requirements you’ll need to become a franchisor. Good luck!

Posted on May 13, 2008 in Franchises Guide | Leave a Comment

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