Are you ready to be a franchisee? (Franchise owner)

As franchise consultants in Asia, we write a lot about our brands, the franchising industry, and typical franchising categories like F&B, Education, or retail.  We focus a lot on the franchisor and their brands.  But what does it take to be a franchisee?  What motivates people to seek out franchises and buy them?  What are franchisors looking for?  What types of people make good franchisees, and conversely who do not?  What are some of the advantages and disadvantages of being a franchisee (as compared with your own non-franchise business)?

What Motivates People To Become Franchisees?

  • They feel uneasy about their job prospects
  • Income caps at work
  • Desire to have control over their own schedule
  • Desire to be their own boss or be an entrepreneur but not want to start from scratch
  • Looking for higher long term income potential

What Are Franchisors Looking For?

Buying a franchise is not like going to a shop and purchasing a new phone.  That is a one sided decision making process.  Not only do you have to be interested to buy and run the franchise, but the franchisor also has to believe you are the right candidate to partner with them.  It is a two way decision making process.  Our CEO often refers to the agreement as a marriage.  It is a two party decision to start, and both parties must work together to make it successful over a long term period, just like a marriage does.  It is not just about finding companies or investors with enough money to buy and launch the brand in their area.  There is much more involved!

Of course they look for certain personalities and skills which we will address in the next question.  On a practical side there are some fairly standard requirements, regardless if you are Little Caesars Pizza, ACE International, Wings, or IWG.  They are looking for people or companies who understand their own local market very well.  It is hard to do business when you don’t understand the culture, target market desires and needs, how to reach them, etc.  You must also understand and have access to the “right” locations.  For most franchises, locations are extremely important.  Locations that are visible, nearby target consumers, easily accessed, but at a price that fits within the business model.

Not required but beneficial things they look for are existing operations in the market, closely related specific experience, a history of success, and a knowledge of marketing.

These all increase the likelihood of success.  Of course, most people don’t have all these things, but it is important that someone on your team does, or that you are willing to hire people who do.

What Types Of People Make Good Franchisees?

Franchising provides a huge and significant boost to a starting business.  Normally the franchisor already has a proven brand, concept, and team who are ready to handle their responsibilities and support you on your new venture.  There are some characteristics that are important to being able to maximize your franchisor and their team.  It is also still your own business, so some of the same characteristics that make any business owner successful still apply.

Franchisee needs to be:

  • Self-motivated and self-disciplined
  • Have leadership and entrepreneurial spirit
  • Have basic understanding of accounting and marketing
  • Good at following systems and processes
  • Willing to listen to the advice of others

Who Do Not Make Good Franchisees?

Since franchises are about the partnership between franchisor and franchisee, people who like to have 100% control, micromanagers, and those who like to always do it their way maybe great businesspeople, but do not make good franchisees.  Just like a marriage, it is a two way street.  A long term game of give and take, of listening and talking.

Franchises are also normally about scale.  It is not about opening 1 restaurant and making it successful, but opening 10 or 20 and building a restaurant empire.  This is an entirely different business model and foundational philosophy.  It requires a different team, different skills, and different execution.  If you want to open a small English language center, be the main teacher, and have personal relationships with all your customers, it may be that franchising isn’t for you.  If you want to open a chain of fitness centers all across your city, than please give us a call and let’s talk about Fire Fitness or Go Fit.

 

What Are The Advantages And Disadvantages Of Purchasing A Franchises Instead Of Inventing Their Own Brand?

While there are restrictions on what you can do as a franchisee, there are many advantages.  There are not that many unique ideas and odds are that whatever you are planning someone has already done it.  By franchising you can take advantage of their experience, move faster, and reduce your own risk.  In general it is like buying into a business that has already existed and proven itself over a period of time, instead of starting something completely new.

You also normally receive the following benefits:

  • Tried and tested products
  • Instant brand recognition
  • International standard designs and décor
  • A proven and efficient system
  • Employee and owner training
  • Ongoing support with marketing, training, Research & Development, Quality control, and Quality assurance
  • Network of other franchisees to leverage on and benefit from

There are a few disadvantages:

  • Lack of complete control of your business
  • Possibility for disagreements or differences of opinion between franchisor and franchisee

Many people will question why I don’t include upfront fees, royalties, and other franchising costs in the disadvantage list.  If you honestly and seriously look at the cost in time, effort, and money it takes a new start up to develop, test, adjust, re-adjust, and adapt to finally come up with a great concept and a solid business model you investment will almost always be significantly higher than any fees you pay a franchisor.

You may see what great International franchises are available in your market here:

Franchise Opportunities – VF Franchise Consulting

Unique opportunity – WAYNES European café

WAYNES® – VF Franchise Consulting

Trendy and exciting!  Healthy Ice Cream?!?

YOLE® ICE CREAM – VF Franchise Consulting

Covid proof education, smart digital classrooms

WINGS® – VF Franchise Consulting

Author: Robert has over 25 year of F&B, including director level position in several well-known coffee franchises, and has lived in ASEAN for more than 13 years.  He is currently the Director of Franchise Development & Operations at VF Franchise Consulting.

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