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12 Entrepreneurs Share Their Thoughts on Franchising

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In today’s business world, it may become necessary for businesses to establish a franchise so as to expand. The decision to franchise comes with different roles and benefits for the parties involved. To succeed in franchising, each business involved must deliver its promise of offering high-quality products to its consumers.

We asked entrepreneurs and business owners to share their thoughts on franchising.

#1- Franchising is an excellent growth tactic for the right concept, but it’s not for every business and concept

Photo Credit: Derek
Koss

Franchising is not for the faint of heart. This is especially true for young companies looking to franchising for rapid growth. Those companies will quickly learn that franchising is a very strategic, long-term and tactical growth plan that takes time to fully develop. I spent 25 years perfecting my business before turning to franchising, making sure that what I was offering to investors was the best opportunity on the  table. That’s an important element to think about when franchising – is your business ready and can it compete against the thousands of others out there?

Thanks to Derek Koss, Time After Time!

#2- They are a way of expansion

Photo Credit: Deborah Masse

Cottage Inn is a Michigan staple, and we’ve been serving up gourmet pizza to fans across the state for more than 60 years. But what’s made us a beloved brand here, such as our commitment to quality ingredients and our stores local giveback to their communities—makes us a great fit for entrepreneurs looking to bring high quality pizza to markets outside of Michigan as well. We take a measured, strategic approach to franchising that involves making sure all prospective franchisees are the right fit for the brand, and that we can support them as much as they need us to. By building on the strength of our history, franchising is a way for us to expand to bring our quality food to as many communities as possible.

Thanks to Deborah Masse, Cottage Inn!

#3- It offers several Benefits

Photo Credit: Christ Birkinshaw

My priority is demonstrating to prospective franchisees what makes Potbelly Sandwich Shop unique from other restaurant concepts, and the drivers that enable their opportunity to replicate, for themselves, Potbelly’s high growth throughout the country. What often first attracts entrepreneurs to Potbelly are their experiences as customers, where they become hooked on our warm, toasty sandwiches and discover the great business opportunity that exists to be a part of a rapidly-growing brand with a stellar reputation. Our strong unit economics, our terrific food, and our commitment to creating memorable customer experiences on every visit to our shops is a powerful combination! Our franchise owners make each shop they open unique to their areas through live, local music, localized decor and showcasing neighborhood moments that recognize community roots. We also have a lot of fun (and create a lot of fans!) by sponsoring community fundraising events that impact great local causes. The total package makes Potbelly stand out in the red-hot sandwich segment, and it’s what I focus on when I’m talking to prospective franchisees.

Thanks to Christ Birkinshaw, Potbelly Sandwich Shop!

#4- Lower risks, higher success ratio and flexibility

Photo Credit: Meg Schmitz

When you own a franchise, you operate a business at a much lower risk than as an independent. In today’s economy, the less risk the better. In fact, owning a franchise has a much higher success ratio over the first five years compared to that an independent business. With a franchise, you know what to expect in terms of costs and marketing, and your consumers know what to expect as well because of the established brand awareness. Plus, franchising doesn’t have to be a full-time endeavor — it can also be part of your financial portfolio. Thousands of people have invested in stable franchises and hire the right people to run the operation, providing a strong return on investment.

Thanks to Meg Schmitz, Franchoice!

#5- Excellent opportunity with solid benefits

Photo Credit: Jeff O’Hara

I have had success investing in two different franchise models, and looked at numerous others over the years. There are a couple of very solid benefits to aligning with a franchised company. One is the base training that goes into getting your business open and the ongoing operations – you are able to take advantage of a wealth of existing knowledge in setting up your systems and not reinventing the wheel. Another is the network of other franchise owners within the system. Every entrepreneur knows the feeling of being on an island and that you are going it alone most of the time. This network gives you people in very similar situations that you can bounce ideas off and confide in. Of course, for every good franchise company there are 10 others that just want your up front payments and aren’t invested in whether you succeed (the overly pushy sales representatives are a dead giveaway). It is critical that you partner with a franchise company that shares your core values, has similar looking customers, and that you are comfortable being in business with. It is a long term partnership you are investing in, after all. So research all of this and speak to other franchise owners – they will always give you candid information. In short, franchising is an excellent opportunity to grow your business faster that you can on your own, just be diligent in picking the right partner.

Thanks to Jeff O’Hara, AlliedPRA New Orleans!

#6- Brings independence and high chance of profitability

Photo Credit: Matt DiMauro

Franchising allows you to remain 100% independently owned while tapping into the advantages of being part of a much larger network. One main advantage of a franchise model is the concept has already been proven and evidenced, therefore providing the franchisee with a blueprint for success. Many times, business experience is not necessary because of the robust training provided by the franchise. In small businesses, most experience day-to-day challenges in every area: sales, marketing, admin, management, etc., and the franchisor’s support/operations team effectively become an extension of the franchisees team, providing the solutions to these challenges. You remain independent, but not alone. In addition, most franchises are able to drive down costs tremendously, while enhancing revenue, and when this happens, the small business owners creates substantially greater levels of profitability. This increase in profitability helps the owner provide for employee raises, fuel growth, and ultimately provides greater freedom.

Thanks to Matt DiMauro, FYZICAL Therapy & Balance Centers!

#7- Enhances brand value and growth

Photo Credit: Roshni Lachhwani

Franchising as a marketing/business strategy not only provides the opportunity for a small business owner to grow through others and attract a larger customer base, but also helps in building a brand recall value due to the streamlined process developed in the process of the creating the franchise model which eventually results in secured goodwill and strong foundation. In short, it enhances your brand value and thereby effecting positively on the business.

Thanks to Roshni Lachhwani, Intellexsys Legal Solutions!

#8- Many franchises have no formula

Photo Credit: Deborah Sweeney

One interesting observation we’ve made about franchising is that many franchisees do not have a formula for how to protect their assets and save on taxes. Franchises have formulas for so many things, but often the start up portion can be confusing. Franchisees likely need to incorporate or form an LLC as part of a franchising agreement. They may also need business licenses, tax IDs and State IDs (for payroll), so it can be a confusing, but important step. It’s a good idea for franchisees to take notice of this important step and also for franchisors to provide great education on how to get these legal pieces of business start-ups handled.

Thanks to Deborah Sweeney, MyCorporation!

#9-  Enables achievement of great heights

Photo Credit: Shane Evans

Franchising has allowed us to grow Massage Heights beyond our wildest dreams. When we opened the first location in 2004, we had no intentions of franchising. But as our first, and then second, location became more popular, people started inquiring about opportunities to own their own Retreat. We realized we had a business model that was capable of growing rapidly with the help of strategic partners. Today, we have over 150 locations across 21 states and Canada, and in 2016 reported more than $95 million in sales. We never could have reached this level of success without franchising.

Thanks to Shane Evans,  Massage Heights!

#10- Best way to promulgate a business

Photo Credit: Renata Castro

Franchising is a fantastic way to promulgate a business’ brand and products abroad while deflecting potential for financial loss. Franchisors must undertake the franchising process almost like a marriage with his franchisees – you need to have something in common, otherwise the partnership doesn’t work. Franchisors must look at global markets and foreigner’s appetite to invest in the USA as a means of obtaining a visa. Development of an understanding of immigration laws will help your business get ahead when it comes to franchise development if you can tap into this market.

Thanks to Renata Castro, Castro Legal Group!

#11- Several things

Photo Credit: Craig Tractenberg

Franchising is the most efficient method of expanding a proven business under the guidance of effective leadership. Franchising allows prospects to be in business for themselves without being in business by themselves, but the franchisor’s leadership must be effective. Note that virtually every restaurant and education chain with more than 100 units franchises. I have advised many emerging businesses on franchising. Some have what it takes, but others should not consider franchising because either their competitive advantage cannot be protected, or the leaders and franchise prospects lack discipline to follow the formula for success.

Thanks to Craig Tractenberg, Fox Rothschild!

#12-  Innovation, Strength and Brand Expansion

Photo Credit:  Kimberly Smith

In 1999, when I started AvenueWest a real estate corporate housing management company out of my loft in Downtown Denver, my goal was not to build a franchise business. After award winning success and being included 3 years in a row on the Inc. 5000 list of fastest growing businesses I was faced with how to best meet the lodging needs of my renters, the investment needs of my property owners and get real estate brokerage licenses in every state. Franchising was the right expansion model for AvenueWest and today there are 9 locally owned AvenueWest Managed Corporate Housing brokerages across the United States. As you look to purchase a franchise business there are a lot of questions you need to ask of the business and of yourself to ensure the business model you purchase will set you up for success. Most importantly get to know the franchisor and the other franchisees and understand why you are going to be more successful in business because of the business model, brand quality and team innovation that comes from working with a group of amazing franchisees. There are also some great SBA financing opportunities available as well. Yes, you can be a successful franchisee but like everything you will have to do some work at your end, the great news is, you will have a terrific support team to get you to where you want to go.

Thanks to Kimberly Smith, AvenueWest Corporate Housing!

What are your thoughts on franchising? Tell us in the comments below.

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This is a post from a CEO Blog Nation writer. CEO Blog Nation is a community of blogs for entrepreneurs and business owners. Started in much the same way as most small businesses, CEO Blog Nation captures the essence of entrepreneurship by allowing entrepreneurs and business owners to have a voice. CEO Blog Nation provides news, information, events and even startup business tips for entrepreneurs, startups and business owners to succeed.
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