Some folks offered helpful insights and suggestions on how to pick a franchise and a few things to watch out for, while other emails came from current franchise owners asking me to help them sell their operations to Anthony R.
Hmm, sounds like it's time to update the old business card once again. Tim Knox: Franchise Broker At Large? Who knows, maybe I can franchise the concept.
Last week I promised we'd take a closer look at a few of the things you should look for when considering a franchise opportunity. Keep in mind that there are thousands of franchise opportunities that range from the low end opportunities available for a few thousand dollars to the high end franchises that cost hundreds of thousands of dollars.
The difference in price is reflected in many ways: the viability of the opportunity, the level of training and support offered to the franchisee, the track record and financial stability of the franchisor, the success rate of the franchisees, and a dozen other factors.
All a lower end franchisor might offer is a training manual and the right to use their company name. Many also have very little interest in weeding out potential franchisees. The truth is many are in business just to collect franchise fees. They have little interest in whether or not a franchisee actually succeeds. If you have a pulse and a checkbook, you can become their franchisee. And your pulse does not have to be that strong.
The higher end franchisors have very strict franchisee requirements and will not allow just anyone to become a part of their franchise system. They also go to much greater lengths to ensure the success of their franchisees. They offer complete hand holding from start to finish and remain heavily involved in the business even after the doors open. Yes, you do pay dearly for their assistance, but as the old saying goes, you get what you pay for.
Here are a few things to look for in a franchise opportunity:
Turnkey operation This is the most appealing feature of many franchise systems. Many of the top franchisors will scout the best location for the business, build and equip the facility, hire and train employees, put you through an extensive management training system, then toss you the keys. Furthermore, they will work closely with you for the first few months to help make certain that you know what to do with the keys once they've been tossed to you.
The majority of franchises don't offer such complete turnkey packages, so be prepared to do much of the upfront work yourself. Often it is up to you to find a location, negotiate the lease, build out the space or erect a building, install the equipment, hire and train a staff etc.
Proven track record and management system As mentioned earlier, many of the lesser-known franchise systems offer you a training manual, maybe a training video, and a few hours of telephone support. Not the best way to learn how to run a business. A good franchisor will provide you with thorough management training, either at their facility or onsite at yours. Since one of the reasons for buying into a franchise system is to tap into their expertise and know-how, thorough training should be a foremost consideration.
Customers waiting for the door to open I don't have the statistics in my pocket to back this up, of course, but I'd bet the farm that every time a new McDonald's opens its door, it's a mere matter of minutes before the first Happy Meal is sold. Many franchisors spend hundreds of millions of dollars on national ad campaigns to promote brand awareness. This works great for the franchisee who can literally have customers waiting for the doors to open on the first day of business.
Always consider the downsides There are downsides to franchising. Foremost is the high cost of entry. The top franchise opportunities require considerable investment on the front end, usually more of an investment than if the entrepreneur started a similar venture on his own. You could open an independent hamburger fast food restaurant for a fraction of the McDonald's franchise fee, but you probably won't sell as many hamburgers. What you're buying from McDonald's is not just a fast food restaurant that sells hamburgers. What you're buying is a brand, a reputation, and a proven business system with ready to eat customers. Be prepared to pay a premium for it.
Another downside is that when you buy into a franchise system you often have to pay a percentage of your revenues back to the franchisor. You might also be required to buy supplies from the franchisor, including inventory, paperwork, software, computer systems, and anything else the franchisor decides that they should supply to you.
And there in lies the biggest downside of all. When you buy into a franchise system you don't control your business, the franchisor does. You have very little say-so in running the business. You must follow their processes and procedures without variation. And should you decide to get out of the business you may not even be allowed to sell the franchise to just anyone. The new owner would have to be approved by the franchisor before a deal could be made final.
The bottomline, Anthony, is to do your homework and make sure the franchise you choose fits your personality, your lifestyle, and your pocket book.
First and foremost, as anyone who watches the evening news knows, the price of gas has skyrocketed and SUVs are notorious for poor gas mileage. Or are they? Depending on what make and model of SUV you choose, some get as good or better gas mileage than some large cars. For example, the 2004 Honda Element gets 22 miles to the gallon in the city, just 2 miles per gallon less than the 2004 Honda Accord. At highway speeds, the Element gets 8 miles per gallon less than the Accord, a larger, but not huge, difference Also, more and more auto manufacturers are designing hybrid gas-electric SUVs that provide better gas mileage along with the traditional extra space and power of SUVs.
Another major consideration when choosing between a car and an SUV is safety. Most people assume that, because of their larger size, that SUVs are safer than cars. However, crash tests conducted in 2003 proved that large SUVs were only slightly safer than mid-sized cars and were actually slightly more dangerous than large cars. SUVs also can roll over when taking turns at high speed, something that cars are far less likely to do. Drivers who are switching to SUVs after many years of driving cars may need some practice to learn to drive their SUV safely.
Many people think that SUVs, due to their larger size are more comfortable and have more cargo capacity than cars. To a certain extent this is true, but it depends heavily on what make and model of SUV you choose. Some SUVs actually have limited cargo space, though almost all have the power to haul a trailer. As far as comfort, many drivers prefer being higher up from the road, but older drivers and those with disabilities may have a hard time getting into the raised seats. Additionally, buckling a child into a car seat installed in the recommended back seat center position may be difficult for shorter moms and dads.
Finally, if you do a lot of city driving and, more importantly, parking, SUVs are less maneuverable and harder to parallel park than traditional cars. Even in the suburbs where most people park in lots, the spaces may not be wide enough for certain SUVs.
Both Tim-knox & Jonathon Hardcastle are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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